Correlation Between Ranger Energy and Bristow

Can any of the company-specific risk be diversified away by investing in both Ranger Energy and Bristow 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 Bristow 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 Bristow Group, you can compare the effects of market volatilities on Ranger Energy and Bristow 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 Bristow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ranger Energy and Bristow.

Diversification Opportunities for Ranger Energy and Bristow

0.59

Correlation Coefficient

Ranger Energy  Bristow

Very weak diversification

The 3 months correlation between Ranger and Bristow is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ranger Energy Services and Bristow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristow Group 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 Bristow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristow Group has no effect on the direction of Ranger Energy i.e., Ranger Energy and Bristow go up and down completely randomly.

Pair Corralation between Ranger Energy and Bristow

Given the investment horizon of 90 days Ranger Energy Services is expected to generate 0.7 times more return on investment than Bristow. However, Ranger Energy Services is 1.42 times less risky than Bristow. It trades about -0.04 of its potential returns per unit of risk. Bristow Group is currently generating about -0.16 per unit of risk. If you would invest  1,220  in Ranger Energy Services on July 4, 2024 and sell it today you would lose (25.00) from holding Ranger Energy Services or give up 2.05% of portfolio value over 90 days.

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

Ranger Energy Services  vs.  Bristow Group

Ranger Energy Services

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ranger Energy Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical and fundamental indicators, Ranger Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Bristow Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bristow Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Bristow may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Ranger Energy and Bristow

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

The idea behind Ranger Energy Services and Bristow Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.