Correlation Between Flotek Industries and Auri
Can any of the company-specific risk be diversified away by investing in both Flotek Industries and Auri 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 Auri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flotek Industries and Auri Inc, you can compare the effects of market volatilities on Flotek Industries and Auri 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 Auri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flotek Industries and Auri.
Diversification Opportunities for Flotek Industries and Auri
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flotek and Auri is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Flotek Industries and Auri Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auri Inc 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 Auri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auri Inc has no effect on the direction of Flotek Industries i.e., Flotek Industries and Auri go up and down completely randomly.
Pair Corralation between Flotek Industries and Auri
Considering the 90-day investment horizon Flotek Industries is expected to generate 10.47 times less return on investment than Auri. But when comparing it to its historical volatility, Flotek Industries is 8.52 times less risky than Auri. It trades about 0.12 of its potential returns per unit of risk. Auri Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.03 in Auri Inc on September 2, 2024 and sell it today you would lose (0.01) from holding Auri Inc or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Flotek Industries vs. Auri Inc
Performance |
| Timeline |
| Flotek Industries |
| Auri Inc |
Flotek Industries and Auri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flotek Industries and Auri
The main advantage of trading using opposite Flotek Industries and Auri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flotek Industries position performs unexpectedly, Auri 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 Auri will offset losses from the drop in Auri'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 |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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