Correlation Between Now and Archrock

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

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

Diversification Opportunities for Now and Archrock

-0.39

Correlation Coefficient

Now  Archrock

Very good diversification

The 3 months correlation between Now and Archrock is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Now Inc and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and Now 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 Now Inc are associated (or correlated) with Archrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archrock has no effect on the direction of Now i.e., Now and Archrock go up and down completely randomly.

Pair Corralation between Now and Archrock

Given the investment horizon of 90 days Now Inc is expected to under-perform the Archrock. In addition to that, Now is 1.55 times more volatile than Archrock. It trades about -0.04 of its total potential returns per unit of risk. Archrock is currently generating about -0.02 per unit of volatility. If you would invest  2,392  in Archrock on May 6, 2025 and sell it today you would lose (55.00) from holding Archrock or give up 2.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.32%
Values	Daily Returns

Now Inc  vs.  Archrock

Now Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Now Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Now is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Archrock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Archrock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Archrock is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Now and Archrock

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

The idea behind Now Inc and Archrock 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.