Correlation Between Energy Services and Fluor
Can any of the company-specific risk be diversified away by investing in both Energy Services and Fluor 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 Energy Services and Fluor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services and Fluor, you can compare the effects of market volatilities on Energy Services and Fluor 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 Energy Services with a short position of Fluor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Fluor.
Diversification Opportunities for Energy Services and Fluor
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energy and Fluor is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services and Fluor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluor and Energy Services 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 Energy Services are associated (or correlated) with Fluor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluor has no effect on the direction of Energy Services i.e., Energy Services and Fluor go up and down completely randomly.
Pair Corralation between Energy Services and Fluor
Given the investment horizon of 90 days Energy Services is expected to generate 2.36 times more return on investment than Fluor. However, Energy Services is 2.36 times more volatile than Fluor. It trades about 0.2 of its potential returns per unit of risk. Fluor is currently generating about 0.31 per unit of risk. If you would invest 1,372 in Energy Services on September 12, 2024 and sell it today you would earn a total of 246.00 from holding Energy Services or generate 17.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services vs. Fluor
Performance |
| Timeline |
| Energy Services |
| Fluor |
Energy Services and Fluor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Fluor
The main advantage of trading using opposite Energy Services and Fluor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services position performs unexpectedly, Fluor 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 Fluor will offset losses from the drop in Fluor's long position.| Energy Services vs. Bouygues SA | Energy Services vs. NV5 Global | Energy Services vs. Matrix Service Co | Energy Services vs. MYR Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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