Correlation Between Methes Energies and FutureFuel Corp
Can any of the company-specific risk be diversified away by investing in both Methes Energies and FutureFuel Corp 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 Methes Energies and FutureFuel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methes Energies International and FutureFuel Corp, you can compare the effects of market volatilities on Methes Energies and FutureFuel Corp 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 Methes Energies with a short position of FutureFuel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methes Energies and FutureFuel Corp.
Diversification Opportunities for Methes Energies and FutureFuel Corp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Methes and FutureFuel is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Methes Energies International and FutureFuel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FutureFuel Corp and Methes Energies 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 Methes Energies International are associated (or correlated) with FutureFuel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FutureFuel Corp has no effect on the direction of Methes Energies i.e., Methes Energies and FutureFuel Corp go up and down completely randomly.
Pair Corralation between Methes Energies and FutureFuel Corp
Given the investment horizon of 90 days Methes Energies International is expected to generate 7.73 times more return on investment than FutureFuel Corp. However, Methes Energies is 7.73 times more volatile than FutureFuel Corp. It trades about 0.21 of its potential returns per unit of risk. FutureFuel Corp is currently generating about 0.01 per unit of risk. If you would invest 2.00 in Methes Energies International on August 27, 2024 and sell it today you would earn a total of 4.50 from holding Methes Energies International or generate 225.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 9.07% |
| Values | Daily Returns |
Methes Energies International vs. FutureFuel Corp
Performance |
| Timeline |
| Methes Energies Inte |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| FutureFuel Corp |
Methes Energies and FutureFuel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methes Energies and FutureFuel Corp
The main advantage of trading using opposite Methes Energies and FutureFuel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methes Energies position performs unexpectedly, FutureFuel Corp 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 FutureFuel Corp will offset losses from the drop in FutureFuel Corp's long position.| Methes Energies vs. Oncologix Tech | Methes Energies vs. Blockchain Industries | Methes Energies vs. Manaris Corp | Methes Energies vs. Alpha One |
| FutureFuel Corp vs. Oil Dri | FutureFuel Corp vs. H B Fuller | FutureFuel Corp vs. Northern Technologies | FutureFuel Corp vs. Cabot |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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