Correlation Between Forum Energy and Now
Can any of the company-specific risk be diversified away by investing in both Forum Energy and Now 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 Forum Energy and Now into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forum Energy Technologies and Now Inc, you can compare the effects of market volatilities on Forum Energy and Now 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 Forum Energy with a short position of Now. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and Now.
Diversification Opportunities for Forum Energy and Now
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Forum and Now is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Technologies and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc and Forum 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 Forum Energy Technologies are associated (or correlated) with Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of Forum Energy i.e., Forum Energy and Now go up and down completely randomly.
Pair Corralation between Forum Energy and Now
Considering the 90-day investment horizon Forum Energy Technologies is expected to under-perform the Now. But the stock apears to be less risky and, when comparing its historical volatility, Forum Energy Technologies is 1.15 times less risky than Now. The stock trades about -0.06 of its potential returns per unit of risk. The Now Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,251 in Now Inc on August 26, 2024 and sell it today you would earn a total of 244.00 from holding Now Inc or generate 19.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forum Energy Technologies vs. Now Inc
Performance |
| Timeline |
| Forum Energy Technologies |
| Now Inc |
Forum Energy and Now Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Energy and Now
The main advantage of trading using opposite Forum Energy and Now positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Energy position performs unexpectedly, Now 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 Now will offset losses from the drop in Now's long position.| Forum Energy vs. Natural Gas Services | Forum Energy vs. Enerflex | Forum Energy vs. Now Inc | Forum Energy vs. Newpark Resources |
| Now vs. Global Industrial Co | Now vs. BlueLinx Holdings | Now vs. WESCO International | Now vs. MSC Industrial Direct |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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