Correlation Between Forum Energy and MRC Global
Can any of the company-specific risk be diversified away by investing in both Forum Energy and MRC Global 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 MRC Global 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 MRC Global, you can compare the effects of market volatilities on Forum Energy and MRC Global 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 MRC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and MRC Global.
Diversification Opportunities for Forum Energy and MRC Global
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Forum and MRC is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Technologies and MRC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Global 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 MRC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRC Global has no effect on the direction of Forum Energy i.e., Forum Energy and MRC Global go up and down completely randomly.
Pair Corralation between Forum Energy and MRC Global
Considering the 90-day investment horizon Forum Energy is expected to generate 2.35 times less return on investment than MRC Global. But when comparing it to its historical volatility, Forum Energy Technologies is 1.39 times less risky than MRC Global. It trades about 0.12 of its potential returns per unit of risk. MRC Global is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,226 in MRC Global on August 27, 2024 and sell it today you would earn a total of 180.00 from holding MRC Global or generate 14.68% 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. MRC Global
Performance |
| Timeline |
| Forum Energy Technologies |
| MRC Global |
Forum Energy and MRC Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Energy and MRC Global
The main advantage of trading using opposite Forum Energy and MRC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Energy position performs unexpectedly, MRC Global 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 MRC Global will offset losses from the drop in MRC Global's long position.| Forum Energy vs. Natural Gas Services | Forum Energy vs. Enerflex | Forum Energy vs. Now Inc | Forum Energy vs. Newpark Resources |
| MRC Global vs. NOV Inc | MRC Global vs. Ranger Energy Services | MRC Global vs. Oil States International | MRC Global vs. Geospace Technologies |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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