Correlation Between Flowserve and Core Laboratories
Can any of the company-specific risk be diversified away by investing in both Flowserve and Core Laboratories 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 Flowserve and Core Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowserve and Core Laboratories NV, you can compare the effects of market volatilities on Flowserve and Core Laboratories 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 Flowserve with a short position of Core Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowserve and Core Laboratories.
Diversification Opportunities for Flowserve and Core Laboratories
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flowserve and Core is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and Core Laboratories NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Laboratories and Flowserve 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 Flowserve are associated (or correlated) with Core Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Laboratories has no effect on the direction of Flowserve i.e., Flowserve and Core Laboratories go up and down completely randomly.
Pair Corralation between Flowserve and Core Laboratories
Considering the 90-day investment horizon Flowserve is expected to generate 0.66 times more return on investment than Core Laboratories. However, Flowserve is 1.51 times less risky than Core Laboratories. It trades about 0.11 of its potential returns per unit of risk. Core Laboratories NV is currently generating about 0.05 per unit of risk. If you would invest 4,786 in Flowserve on August 30, 2024 and sell it today you would earn a total of 1,345 from holding Flowserve or generate 28.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowserve vs. Core Laboratories NV
Performance |
| Timeline |
| Flowserve |
| Core Laboratories |
Flowserve and Core Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowserve and Core Laboratories
The main advantage of trading using opposite Flowserve and Core Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve position performs unexpectedly, Core Laboratories 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 Core Laboratories will offset losses from the drop in Core Laboratories' long position.| Flowserve vs. Illinois Tool Works | Flowserve vs. Pentair PLC | Flowserve vs. Emerson Electric | Flowserve vs. Smith AO |
| Core Laboratories vs. Bristow Group | Core Laboratories vs. RPC Inc | Core Laboratories vs. NOV Inc | Core Laboratories vs. Oceaneering International |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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