Correlation Between Micro Focus and World Fuel

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

Diversification Opportunities for Micro Focus and World Fuel

  Correlation Coefficient

Poor diversification

The 3 months correlation between Micro and World is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Micro Focus International and World Fuel Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Fuel Services and Micro Focus 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 Micro Focus International are associated (or correlated) with World Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Fuel Services has no effect on the direction of Micro Focus i.e., Micro Focus and World Fuel go up and down completely randomly.

Pair Corralation between Micro Focus and World Fuel

Given the investment horizon of 90 days Micro Focus International is expected to generate 2.29 times more return on investment than World Fuel. However, Micro Focus is 2.29 times more volatile than World Fuel Services. It trades about 0.04 of its potential returns per unit of risk. World Fuel Services is currently generating about 0.01 per unit of risk. If you would invest  528.00  in Micro Focus International on September 7, 2022 and sell it today you would earn a total of  100.00  from holding Micro Focus International or generate 18.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Micro Focus International  vs.  World Fuel Services

 Performance (%) 
Micro Focus International 
Micro Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Micro Focus International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Micro Focus may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Micro Price Channel

World Fuel Services 
World Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in World Fuel Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, World Fuel unveiled solid returns over the last few months and may actually be approaching a breakup point.

World Price Channel

Micro Focus and World Fuel Volatility Contrast

   Predicted Return Density   

Pair Trading with Micro Focus and World Fuel

The main advantage of trading using opposite Micro Focus and World Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micro Focus position performs unexpectedly, World Fuel 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 World Fuel will offset losses from the drop in World Fuel's long position.
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The idea behind Micro Focus International and World Fuel Services 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.
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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