Correlation Between Fluor and Comfort Systems
Can any of the company-specific risk be diversified away by investing in both Fluor and Comfort Systems 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 Fluor and Comfort Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fluor and Comfort Systems USA, you can compare the effects of market volatilities on Fluor and Comfort Systems 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 Fluor with a short position of Comfort Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fluor and Comfort Systems.
Diversification Opportunities for Fluor and Comfort Systems
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fluor and Comfort is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fluor and Comfort Systems USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comfort Systems USA and Fluor 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 Fluor are associated (or correlated) with Comfort Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comfort Systems USA has no effect on the direction of Fluor i.e., Fluor and Comfort Systems go up and down completely randomly.
Pair Corralation between Fluor and Comfort Systems
Considering the 90-day investment horizon Fluor is expected to generate 4.11 times less return on investment than Comfort Systems. In addition to that, Fluor is 1.61 times more volatile than Comfort Systems USA. It trades about 0.07 of its total potential returns per unit of risk. Comfort Systems USA is currently generating about 0.48 per unit of volatility. If you would invest 38,899 in Comfort Systems USA on August 27, 2024 and sell it today you would earn a total of 10,609 from holding Comfort Systems USA or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fluor vs. Comfort Systems USA
Performance |
| Timeline |
| Fluor |
| Comfort Systems USA |
Fluor and Comfort Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fluor and Comfort Systems
The main advantage of trading using opposite Fluor and Comfort Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fluor position performs unexpectedly, Comfort Systems 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 Comfort Systems will offset losses from the drop in Comfort Systems' long position.The idea behind Fluor and Comfort Systems USA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Comfort Systems vs. MYR Group | Comfort Systems vs. Granite Construction Incorporated | Comfort Systems vs. Dycom Industries | Comfort Systems vs. MasTec Inc |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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