Correlation Between FormFactor and Archrock
Can any of the company-specific risk be diversified away by investing in both FormFactor and Archrock 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 FormFactor and Archrock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FormFactor and Archrock, you can compare the effects of market volatilities on FormFactor and Archrock 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 FormFactor with a short position of Archrock. Check out your portfolio center. Please also check ongoing floating volatility patterns of FormFactor and Archrock.
Diversification Opportunities for FormFactor and Archrock
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FormFactor and Archrock is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and FormFactor 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 FormFactor are associated (or correlated) with Archrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archrock has no effect on the direction of FormFactor i.e., FormFactor and Archrock go up and down completely randomly.
Pair Corralation between FormFactor and Archrock
Given the investment horizon of 90 days FormFactor is expected to under-perform the Archrock. In addition to that, FormFactor is 1.23 times more volatile than Archrock. It trades about -0.07 of its total potential returns per unit of risk. Archrock is currently generating about 0.37 per unit of volatility. If you would invest 2,020 in Archrock on August 26, 2024 and sell it today you would earn a total of 566.00 from holding Archrock or generate 28.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FormFactor vs. Archrock
Performance |
| Timeline |
| FormFactor |
| Archrock |
FormFactor and Archrock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FormFactor and Archrock
The main advantage of trading using opposite FormFactor and Archrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FormFactor position performs unexpectedly, Archrock 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 Archrock will offset losses from the drop in Archrock's long position.The idea behind FormFactor and Archrock 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.| Archrock vs. ProPetro Holding Corp | Archrock vs. Select Energy Services | Archrock vs. USA Compression Partners | Archrock vs. Par Pacific Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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