Correlation Between Forum Energy and STEP Energy
Can any of the company-specific risk be diversified away by investing in both Forum Energy and STEP 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 Forum Energy and STEP Energy 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 STEP Energy Services, you can compare the effects of market volatilities on Forum Energy and STEP 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 Forum Energy with a short position of STEP Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and STEP Energy.
Diversification Opportunities for Forum Energy and STEP Energy
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Forum and STEP is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Technologies and STEP Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEP Energy Services 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 STEP Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEP Energy Services has no effect on the direction of Forum Energy i.e., Forum Energy and STEP Energy go up and down completely randomly.
Pair Corralation between Forum Energy and STEP Energy
Considering the 90-day investment horizon Forum Energy Technologies is expected to under-perform the STEP Energy. But the stock apears to be less risky and, when comparing its historical volatility, Forum Energy Technologies is 1.76 times less risky than STEP Energy. The stock trades about 0.0 of its potential returns per unit of risk. The STEP Energy Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 295.00 in STEP Energy Services on September 3, 2024 and sell it today you would earn a total of 70.00 from holding STEP Energy Services or generate 23.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Forum Energy Technologies vs. STEP Energy Services
Performance |
| Timeline |
| Forum Energy Technologies |
| STEP Energy Services |
Forum Energy and STEP Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Energy and STEP Energy
The main advantage of trading using opposite Forum Energy and STEP Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Energy position performs unexpectedly, STEP 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 STEP Energy will offset losses from the drop in STEP Energy's long position.| Forum Energy vs. Natural Gas Services | Forum Energy vs. Enerflex | Forum Energy vs. Now Inc | Forum Energy vs. Newpark Resources |
| STEP Energy vs. Total Energy Services | STEP Energy vs. Trican Well Service | STEP Energy vs. Koil Energy Solutions | STEP Energy vs. TerraVest Industries |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |