Correlation Between Essential Energy and Forum Energy
Can any of the company-specific risk be diversified away by investing in both Essential Energy and Forum Energy 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 Essential Energy and Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essential Energy Services and Forum Energy Technologies, you can compare the effects of market volatilities on Essential Energy and Forum Energy 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 Essential Energy with a short position of Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essential Energy and Forum Energy.
Diversification Opportunities for Essential Energy and Forum Energy
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Essential and Forum is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Essential Energy Services and Forum Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Technologies and Essential 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 Essential Energy Services are associated (or correlated) with Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Technologies has no effect on the direction of Essential Energy i.e., Essential Energy and Forum Energy go up and down completely randomly.
Pair Corralation between Essential Energy and Forum Energy
If you would invest 28.00 in Essential Energy Services on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Essential Energy Services or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.8% |
| Values | Daily Returns |
Essential Energy Services vs. Forum Energy Technologies
Performance |
| Timeline |
| Essential Energy Services |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Forum Energy Technologies |
Essential Energy and Forum Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essential Energy and Forum Energy
The main advantage of trading using opposite Essential Energy and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Energy position performs unexpectedly, Forum Energy 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 Forum Energy will offset losses from the drop in Forum Energy's long position.| Essential Energy vs. Source Energy Services | Essential Energy vs. Total Energy Services | Essential Energy vs. Trican Well Service | Essential Energy vs. STEP Energy Services |
| Forum Energy vs. Natural Gas Services | Forum Energy vs. Enerflex | Forum Energy vs. Now Inc | Forum Energy vs. Newpark Resources |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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