Correlation Between Bristow and Oil States

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

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

Diversification Opportunities for Bristow and Oil States

0.8

Correlation Coefficient

Bristow  Oil States

Very poor diversification

The 3 months correlation between Bristow and Oil is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bristow Group and Oil States International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil States International and Bristow 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 Bristow Group are associated (or correlated) with Oil States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil States International has no effect on the direction of Bristow i.e., Bristow and Oil States go up and down completely randomly.

Pair Corralation between Bristow and Oil States

Given the investment horizon of 90 days Bristow Group is expected to generate 0.76 times more return on investment than Oil States. However, Bristow Group is 1.32 times less risky than Oil States. It trades about 0.04 of its potential returns per unit of risk. Oil States International is currently generating about 0.0 per unit of risk. If you would invest  2,621  in Bristow Group on August 22, 2024 and sell it today you would earn a total of  1,131  from holding Bristow Group or generate 43.15% return on investment over 90 days.

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

Bristow Group  vs.  Oil States International

Bristow Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bristow Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Bristow is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Oil States International

Risk-Adjusted Performance

3 of 100

Weak

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

Pair Trading with Bristow and Oil States

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

The idea behind Bristow Group and Oil States International 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.