Correlation Between Falcon Oil and Ametek

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

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

Diversification Opportunities for Falcon Oil and Ametek

-0.82

Correlation Coefficient

Falcon Oil  Ametek

Pay attention - limited upside

The 3 months correlation between Falcon and Ametek is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Oil Gas and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and Falcon Oil 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 Falcon Oil Gas are associated (or correlated) with Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Falcon Oil i.e., Falcon Oil and Ametek go up and down completely randomly.

Pair Corralation between Falcon Oil and Ametek

Assuming the 90 days trading horizon Falcon Oil Gas is expected to under-perform the Ametek. In addition to that, Falcon Oil is 2.79 times more volatile than Ametek Inc. It trades about -0.22 of its total potential returns per unit of risk. Ametek Inc is currently generating about -0.43 per unit of volatility. If you would invest  19,680  in Ametek Inc on September 23, 2024 and sell it today you would lose (1,293) from holding Ametek Inc or give up 6.57% of portfolio value over 90 days.

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

Falcon Oil Gas  vs.  Ametek Inc

Falcon Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ametek Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ametek may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Falcon Oil and Ametek

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

The idea behind Falcon Oil Gas and Ametek Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.