Correlation Between Exterran Corp and Forum Energy

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Can any of the company-specific risk be diversified away by investing in both Exterran Corp 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 Exterran Corp and Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exterran Corp and Forum Energy Technologies, you can compare the effects of market volatilities on Exterran Corp 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 Exterran Corp with a short position of Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exterran Corp and Forum Energy.

Diversification Opportunities for Exterran Corp and Forum Energy

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Exterran and Forum is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Exterran Corp 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 Exterran Corp 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 Exterran Corp 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 Exterran Corp i.e., Exterran Corp and Forum Energy go up and down completely randomly.

Pair Corralation between Exterran Corp and Forum Energy

Given the investment horizon of 90 days Exterran Corp is expected to generate 1.07 times less return on investment than Forum Energy. In addition to that, Exterran Corp is 1.44 times more volatile than Forum Energy Technologies. It trades about 0.02 of its total potential returns per unit of risk. Forum Energy Technologies is currently generating about 0.03 per unit of volatility. If you would invest  1,934  in Forum Energy Technologies on July 8, 2022 and sell it today you would earn a total of  348.00  from holding Forum Energy Technologies or generate 17.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Exterran Corp  vs.  Forum Energy Technologies

 Performance (%) 
       Timeline  
Exterran Corp 
Exterran Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exterran Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Exterran Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Exterran Price Channel

Forum Energy Technologies 
Forum Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, Forum Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Forum Price Channel

Exterran Corp and Forum Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Exterran Corp and Forum Energy

The main advantage of trading using opposite Exterran Corp and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exterran Corp 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.
Exterran Corp vs. Amazon Inc
The idea behind Exterran Corp and Forum Energy Technologies 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.
Forum Energy vs. Amazon Inc
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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