Correlation Between Fluor and Comfort Systems

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

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

Diversification Opportunities for Fluor and Comfort Systems

0.93

Correlation Coefficient

Fluor  Comfort Systems

Almost no diversification

The 3 months correlation between Fluor and Comfort is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fluor and Comfort Systems USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comfort Systems USA 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 Comfort Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comfort Systems USA has no effect on the direction of Fluor i.e., Fluor and Comfort Systems go up and down completely randomly.

Pair Corralation between Fluor and Comfort Systems

Considering the 90-day investment horizon Fluor is expected to under-perform the Comfort Systems. But the stock apears to be less risky and, when comparing its historical volatility, Fluor is 1.49 times less risky than Comfort Systems. The stock trades about -0.13 of its potential returns per unit of risk. The Comfort Systems USA is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  42,876  in Comfort Systems USA on December 28, 2024 and sell it today you would lose (9,648) from holding Comfort Systems USA or give up 22.5% of portfolio value over 90 days.

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

Fluor  vs.  Comfort Systems USA

Fluor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fluor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Comfort Systems USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Comfort Systems USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fluor and Comfort Systems

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

The idea behind Fluor and Comfort Systems USA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.