Correlation Between Ranger Energy and Schlumberger

Can any of the company-specific risk be diversified away by investing in both Ranger Energy and Schlumberger at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ranger Energy and Schlumberger into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ranger Energy Services and Schlumberger NV, you can compare the effects of market volatilities on Ranger Energy and Schlumberger and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ranger Energy with a short position of Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ranger Energy and Schlumberger.

Diversification Opportunities for Ranger Energy and Schlumberger

0.87

Correlation Coefficient

Ranger Energy  Schlumberger

Very poor diversification

The 3 months correlation between Ranger and Schlumberger is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ranger Energy Services and Schlumberger NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger NV and Ranger Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ranger Energy Services are associated (or correlated) with Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger NV has no effect on the direction of Ranger Energy i.e., Ranger Energy and Schlumberger go up and down completely randomly.

Pair Corralation between Ranger Energy and Schlumberger

Given the investment horizon of 90 days Ranger Energy Services is expected to under-perform the Schlumberger. In addition to that, Ranger Energy is 1.86 times more volatile than Schlumberger NV. It trades about -0.2 of its total potential returns per unit of risk. Schlumberger NV is currently generating about -0.26 per unit of volatility. If you would invest  5,440  in Schlumberger NV on January 20, 2024 and sell it today you would lose (346.00) from holding Schlumberger NV or give up 6.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Ranger Energy Services  vs.  Schlumberger NV

Ranger Energy Services

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ranger Energy Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Ranger Energy may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Schlumberger NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schlumberger NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Schlumberger is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ranger Energy and Schlumberger

The main advantage of trading using opposite Ranger Energy and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ranger Energy position performs unexpectedly, Schlumberger can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Schlumberger will offset losses from the drop in Schlumberger's long position.

The idea behind Ranger Energy Services and Schlumberger NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.