Correlation Between Fluent and Transocean

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

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

Diversification Opportunities for Fluent and Transocean

0.43

Correlation Coefficient

Fluent  Transocean

Very weak diversification

The 3 months correlation between Fluent and Transocean is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean 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 Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Fluent i.e., Fluent and Transocean go up and down completely randomly.

Pair Corralation between Fluent and Transocean

Given the investment horizon of 90 days Fluent Inc is expected to under-perform the Transocean. In addition to that, Fluent is 1.25 times more volatile than Transocean. It trades about -0.02 of its total potential returns per unit of risk. Transocean is currently generating about -0.02 per unit of volatility. If you would invest  414.00  in Transocean on October 25, 2024 and sell it today you would lose (27.00) from holding Transocean or give up 6.52% 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.  Transocean

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 comparatively stable basic indicators, Fluent is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Transocean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transocean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Transocean is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fluent and Transocean

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

The idea behind Fluent Inc and Transocean 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.