Correlation Between Flotek Industries and Archrock
Can any of the company-specific risk be diversified away by investing in both Flotek Industries 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 Flotek Industries and Archrock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flotek Industries and Archrock, you can compare the effects of market volatilities on Flotek Industries 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 Flotek Industries with a short position of Archrock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flotek Industries and Archrock.
Diversification Opportunities for Flotek Industries and Archrock
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Flotek and Archrock is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Flotek Industries and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and Flotek Industries 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 Flotek Industries 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 Flotek Industries i.e., Flotek Industries and Archrock go up and down completely randomly.
Pair Corralation between Flotek Industries and Archrock
Considering the 90-day investment horizon Flotek Industries is expected to generate 1.83 times more return on investment than Archrock. However, Flotek Industries is 1.83 times more volatile than Archrock. It trades about 0.44 of its potential returns per unit of risk. Archrock is currently generating about 0.37 per unit of risk. If you would invest 490.00 in Flotek Industries on August 27, 2024 and sell it today you would earn a total of 327.00 from holding Flotek Industries or generate 66.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flotek Industries vs. Archrock
Performance |
| Timeline |
| Flotek Industries |
| Archrock |
Flotek Industries and Archrock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flotek Industries and Archrock
The main advantage of trading using opposite Flotek Industries and Archrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flotek Industries 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.| Flotek Industries vs. ProPetro Holding Corp | Flotek Industries vs. Liberty Oilfield Services | Flotek Industries vs. KLX Energy Services | Flotek Industries vs. MRC Global |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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