Correlation Between Fluor and Aecom Technology

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

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

Diversification Opportunities for Fluor and Aecom Technology

0.84

Correlation Coefficient

Fluor  Aecom Technology

Very poor diversification

The 3 months correlation between Fluor and Aecom is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fluor and Aecom Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecom Technology and Fluor 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 Fluor are associated (or correlated) with Aecom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecom Technology has no effect on the direction of Fluor i.e., Fluor and Aecom Technology go up and down completely randomly.

Pair Corralation between Fluor and Aecom Technology

Considering the 90-day investment horizon Fluor is expected to generate 1.49 times less return on investment than Aecom Technology. In addition to that, Fluor is 2.0 times more volatile than Aecom Technology. It trades about 0.06 of its total potential returns per unit of risk. Aecom Technology is currently generating about 0.19 per unit of volatility. If you would invest  10,846  in Aecom Technology on August 30, 2024 and sell it today you would earn a total of  828.00  from holding Aecom Technology or generate 7.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Fluor  vs.  Aecom Technology

Fluor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fluor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating essential indicators, Fluor may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Aecom Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aecom Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Aecom Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fluor and Aecom Technology

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

The idea behind Fluor and Aecom Technology 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..