Correlation Between FibraHotel and Fluor

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

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

Diversification Opportunities for FibraHotel and Fluor

0.53

Correlation Coefficient

FibraHotel  Fluor

Very weak diversification

The 3 months correlation between FibraHotel and Fluor is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding FibraHotel and Fluor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluor and FibraHotel 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 FibraHotel are associated (or correlated) with Fluor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluor has no effect on the direction of FibraHotel i.e., FibraHotel and Fluor go up and down completely randomly.

Pair Corralation between FibraHotel and Fluor

Assuming the 90 days trading horizon FibraHotel is expected to generate 3.35 times less return on investment than Fluor. But when comparing it to its historical volatility, FibraHotel is 1.3 times less risky than Fluor. It trades about 0.04 of its potential returns per unit of risk. Fluor is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  65,599  in Fluor on September 30, 2024 and sell it today you would earn a total of  32,928  from holding Fluor or generate 50.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

FibraHotel  vs.  Fluor

FibraHotel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FibraHotel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, FibraHotel sustained solid returns over the last few months and may actually be approaching a breakup point.

Fluor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fluor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Fluor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FibraHotel and Fluor

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

The idea behind FibraHotel and Fluor 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.