Correlation Between Boat Rocker and Falcon Energy

Can any of the company-specific risk be diversified away by investing in both Boat Rocker and Falcon 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 Boat Rocker and Falcon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boat Rocker Media and Falcon Energy Materials, you can compare the effects of market volatilities on Boat Rocker and Falcon 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 Boat Rocker with a short position of Falcon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boat Rocker and Falcon Energy.

Diversification Opportunities for Boat Rocker and Falcon Energy

-0.77

Correlation Coefficient

Boat Rocker  Falcon Energy

Pay attention - limited upside

The 3 months correlation between Boat and Falcon is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Boat Rocker Media and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials and Boat Rocker 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 Boat Rocker Media are associated (or correlated) with Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of Boat Rocker i.e., Boat Rocker and Falcon Energy go up and down completely randomly.

Pair Corralation between Boat Rocker and Falcon Energy

Assuming the 90 days trading horizon Boat Rocker Media is expected to under-perform the Falcon Energy. In addition to that, Boat Rocker is 1.06 times more volatile than Falcon Energy Materials. It trades about -0.1 of its total potential returns per unit of risk. Falcon Energy Materials is currently generating about 0.03 per unit of volatility. If you would invest  68.00  in Falcon Energy Materials on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Falcon Energy Materials or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Boat Rocker Media  vs.  Falcon Energy Materials

Boat Rocker Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boat Rocker Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Falcon Energy Materials

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Falcon Energy Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Falcon Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Boat Rocker and Falcon Energy

The main advantage of trading using opposite Boat Rocker and Falcon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boat Rocker position performs unexpectedly, Falcon 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 Falcon Energy will offset losses from the drop in Falcon Energy's long position.

The idea behind Boat Rocker Media and Falcon Energy Materials 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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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.