Correlation Between Forum Energy and Trican Well
Can any of the company-specific risk be diversified away by investing in both Forum Energy and Trican Well 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 Trican Well 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 Trican Well Service, you can compare the effects of market volatilities on Forum Energy and Trican Well 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 Trican Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and Trican Well.
Diversification Opportunities for Forum Energy and Trican Well
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Forum and Trican is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Technologies and Trican Well Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trican Well Service 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 Trican Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trican Well Service has no effect on the direction of Forum Energy i.e., Forum Energy and Trican Well go up and down completely randomly.
Pair Corralation between Forum Energy and Trican Well
Considering the 90-day investment horizon Forum Energy Technologies is expected to under-perform the Trican Well. In addition to that, Forum Energy is 1.08 times more volatile than Trican Well Service. It trades about 0.0 of its total potential returns per unit of risk. Trican Well Service is currently generating about 0.05 per unit of volatility. If you would invest 308.00 in Trican Well Service on September 3, 2024 and sell it today you would earn a total of 40.00 from holding Trican Well Service or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forum Energy Technologies vs. Trican Well Service
Performance |
| Timeline |
| Forum Energy Technologies |
| Trican Well Service |
Forum Energy and Trican Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Energy and Trican Well
The main advantage of trading using opposite Forum Energy and Trican Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Energy position performs unexpectedly, Trican Well 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 Trican Well will offset losses from the drop in Trican Well's long position.| Forum Energy vs. Natural Gas Services | Forum Energy vs. Enerflex | Forum Energy vs. Now Inc | Forum Energy vs. Newpark Resources |
| Trican Well vs. STEP Energy Services | Trican Well vs. Koil Energy Solutions | Trican Well vs. TerraVest Industries | Trican Well vs. Source Energy Services |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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