Correlation Between NXT Energy and Core Laboratories

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

By analyzing existing cross correlation between NXT Energy Solutions and Core Laboratories NV, you can compare the effects of market volatilities on NXT Energy and Core Laboratories 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 NXT Energy with a short position of Core Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXT Energy and Core Laboratories.

Diversification Opportunities for NXT Energy and Core Laboratories

-0.72

Correlation Coefficient

NXT Energy  Core Laboratories

Pay attention - limited upside

The 3 months correlation between NXT and Core is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding NXT Energy Solutions and Core Laboratories NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Laboratories and NXT 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 NXT Energy Solutions are associated (or correlated) with Core Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Laboratories has no effect on the direction of NXT Energy i.e., NXT Energy and Core Laboratories go up and down completely randomly.

Pair Corralation between NXT Energy and Core Laboratories

Assuming the 90 days horizon NXT Energy Solutions is expected to under-perform the Core Laboratories. In addition to that, NXT Energy is 1.44 times more volatile than Core Laboratories NV. It trades about -0.07 of its total potential returns per unit of risk. Core Laboratories NV is currently generating about 0.01 per unit of volatility. If you would invest  1,222  in Core Laboratories NV on July 7, 2025 and sell it today you would lose (8.00) from holding Core Laboratories NV or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

NXT Energy Solutions  vs.  Core Laboratories NV

NXT Energy Solutions

Risk-Adjusted Performance

Weakest

Over the last 90 days NXT Energy Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in November 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Core Laboratories

Risk-Adjusted Performance

Weak

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

Pair Trading with NXT Energy and Core Laboratories

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

The idea behind NXT Energy Solutions and Core Laboratories 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.