Correlation Between FutureFuel Corp and Crown Electrokinetics

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

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

Diversification Opportunities for FutureFuel Corp and Crown Electrokinetics

0.66

Correlation Coefficient

FutureFuel Corp  Crown Electrokinetics

Poor diversification

The 3 months correlation between FutureFuel and Crown is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding FutureFuel Corp and Crown Electrokinetics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Electrokinetics and FutureFuel 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 FutureFuel Corp are associated (or correlated) with Crown Electrokinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Electrokinetics has no effect on the direction of FutureFuel Corp i.e., FutureFuel Corp and Crown Electrokinetics go up and down completely randomly.

Pair Corralation between FutureFuel Corp and Crown Electrokinetics

Allowing for the 90-day total investment horizon FutureFuel Corp is expected to generate 0.09 times more return on investment than Crown Electrokinetics. However, FutureFuel Corp is 10.94 times less risky than Crown Electrokinetics. It trades about 0.22 of its potential returns per unit of risk. Crown Electrokinetics Corp is currently generating about -0.01 per unit of risk. If you would invest  519.00  in FutureFuel Corp on October 26, 2024 and sell it today you would earn a total of  34.00  from holding FutureFuel Corp or generate 6.55% return on investment over 90 days.

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

FutureFuel Corp  vs.  Crown Electrokinetics Corp

FutureFuel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FutureFuel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Crown Electrokinetics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Electrokinetics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with FutureFuel Corp and Crown Electrokinetics

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

The idea behind FutureFuel Corp and Crown Electrokinetics Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.