Correlation Between Fluent and Drilling Tools

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

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

Diversification Opportunities for Fluent and Drilling Tools

0.47

Correlation Coefficient

Fluent  Drilling Tools

Very weak diversification

The 3 months correlation between Fluent and Drilling is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc and Drilling Tools International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drilling Tools Inter and Fluent 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 Fluent Inc are associated (or correlated) with Drilling Tools. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drilling Tools Inter has no effect on the direction of Fluent i.e., Fluent and Drilling Tools go up and down completely randomly.

Pair Corralation between Fluent and Drilling Tools

Given the investment horizon of 90 days Fluent Inc is expected to generate 1.29 times more return on investment than Drilling Tools. However, Fluent is 1.29 times more volatile than Drilling Tools International. It trades about 0.02 of its potential returns per unit of risk. Drilling Tools International is currently generating about 0.01 per unit of risk. If you would invest  309.00  in Fluent Inc on September 28, 2024 and sell it today you would lose (34.01) from holding Fluent Inc or give up 11.01% of portfolio value over 90 days.

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

Fluent Inc  vs.  Drilling Tools International

Fluent Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluent Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Drilling Tools Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Drilling Tools International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Fluent and Drilling Tools

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

The idea behind Fluent Inc and Drilling Tools International 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..