Correlation Between Bristow and Cactus

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

By analyzing existing cross correlation between Bristow Group and Cactus Inc, you can compare the effects of market volatilities on Bristow and Cactus 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 Cactus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristow and Cactus.

Diversification Opportunities for Bristow and Cactus

0.93

Correlation Coefficient

Bristow  Cactus

Almost no diversification

The 3 months correlation between Bristow and Cactus is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bristow Group and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc 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 Cactus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cactus Inc has no effect on the direction of Bristow i.e., Bristow and Cactus go up and down completely randomly.

Pair Corralation between Bristow and Cactus

Given the investment horizon of 90 days Bristow Group is expected to under-perform the Cactus. But the stock apears to be less risky and, when comparing its historical volatility, Bristow Group is 1.19 times less risky than Cactus. The stock trades about -0.03 of its potential returns per unit of risk. The Cactus Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,722  in Cactus Inc on March 7, 2025 and sell it today you would lose (273.00) from holding Cactus Inc or give up 5.78% of portfolio value over 90 days.

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

Bristow Group  vs.  Cactus Inc

Bristow Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bristow Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Cactus Inc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bristow and Cactus

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

The idea behind Bristow Group and Cactus Inc 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.