Correlation Between Weatherford International and Tidewater

Can any of the company-specific risk be diversified away by investing in both Weatherford International and Tidewater 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 Weatherford International and Tidewater into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Weatherford International Plc and Tidewater, you can compare the effects of market volatilities on Weatherford International and Tidewater 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 Weatherford International with a short position of Tidewater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and Tidewater.

Diversification Opportunities for Weatherford International and Tidewater

-0.13

Correlation Coefficient

Weatherford International  Tidewater

Good diversification

The 3 months correlation between Weatherford and Tidewater is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International Plc and Tidewater in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidewater and Weatherford International 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 Weatherford International Plc are associated (or correlated) with Tidewater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidewater has no effect on the direction of Weatherford International i.e., Weatherford International and Tidewater go up and down completely randomly.

Pair Corralation between Weatherford International and Tidewater

If you would invest  8,926  in Tidewater on March 22, 2024 and sell it today you would earn a total of  645.00  from holding Tidewater or generate 7.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.38%
Values	Daily Returns

Weatherford International Plc  vs.  Tidewater

Weatherford International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weatherford International Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Weatherford International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tidewater

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tidewater are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Tidewater may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Weatherford International and Tidewater

The main advantage of trading using opposite Weatherford International and Tidewater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International position performs unexpectedly, Tidewater 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 Tidewater will offset losses from the drop in Tidewater's long position.

The idea behind Weatherford International Plc and Tidewater 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.