Correlation Between Oil States and Forum Energy
Can any of the company-specific risk be diversified away by investing in both Oil States and Forum Energy 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 Oil States and Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil States International and Forum Energy Technologies, you can compare the effects of market volatilities on Oil States and Forum Energy 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 Oil States with a short position of Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil States and Forum Energy.
Diversification Opportunities for Oil States and Forum Energy
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oil and Forum is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Oil States International and Forum Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Technologies and Oil States 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 Oil States International are associated (or correlated) with Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Technologies has no effect on the direction of Oil States i.e., Oil States and Forum Energy go up and down completely randomly.
Pair Corralation between Oil States and Forum Energy
Considering the 90-day investment horizon Oil States International is expected to generate 1.16 times more return on investment than Forum Energy. However, Oil States is 1.16 times more volatile than Forum Energy Technologies. It trades about 0.01 of its potential returns per unit of risk. Forum Energy Technologies is currently generating about -0.03 per unit of risk. If you would invest 635.00 in Oil States International on August 27, 2024 and sell it today you would lose (63.00) from holding Oil States International or give up 9.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil States International vs. Forum Energy Technologies
Performance |
| Timeline |
| Oil States International |
| Forum Energy Technologies |
Oil States and Forum Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil States and Forum Energy
The main advantage of trading using opposite Oil States and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil States position performs unexpectedly, Forum Energy 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 Forum Energy will offset losses from the drop in Forum Energy's long position.| Oil States vs. ProPetro Holding Corp | Oil States vs. RPC Inc | Oil States vs. MRC Global | Oil States vs. Expro Group Holdings |
| Forum Energy vs. Natural Gas Services | Forum Energy vs. Enerflex | Forum Energy vs. Now Inc | Forum Energy vs. Newpark Resources |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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