Correlation Between Ferguson Plc and Oil States
Can any of the company-specific risk be diversified away by investing in both Ferguson Plc 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 Ferguson Plc and Oil States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferguson Plc and Oil States International, you can compare the effects of market volatilities on Ferguson Plc 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 Ferguson Plc with a short position of Oil States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferguson Plc and Oil States.
Diversification Opportunities for Ferguson Plc and Oil States
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ferguson and Oil is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ferguson Plc 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 Ferguson Plc 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 Ferguson Plc 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 Ferguson Plc i.e., Ferguson Plc and Oil States go up and down completely randomly.
Pair Corralation between Ferguson Plc and Oil States
Given the investment horizon of 90 days Ferguson Plc is expected to generate 0.5 times more return on investment than Oil States. However, Ferguson Plc is 1.99 times less risky than Oil States. It trades about 0.08 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 12,599 in Ferguson Plc on September 3, 2024 and sell it today you would earn a total of 8,811 from holding Ferguson Plc or generate 69.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferguson Plc vs. Oil States International
Performance |
| Timeline |
| Ferguson Plc |
| Oil States International |
Ferguson Plc and Oil States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferguson Plc and Oil States
The main advantage of trading using opposite Ferguson Plc and Oil States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferguson Plc 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.| Ferguson Plc vs. Core Main | Ferguson Plc vs. BlueLinx Holdings | Ferguson Plc vs. EVI Industries | Ferguson Plc vs. Watsco Inc |
| Oil States vs. Oceaneering International | Oil States vs. ChampionX | Oil States vs. TechnipFMC PLC | Oil States vs. Helix Energy Solutions |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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