Correlation Between Fluor and Quanta Services

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

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

Diversification Opportunities for Fluor and Quanta Services

0.96

Correlation Coefficient

Fluor  Quanta Services

Almost no diversification

The 3 months correlation between Fluor and Quanta is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fluor and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Services 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 Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of Fluor i.e., Fluor and Quanta Services go up and down completely randomly.

Pair Corralation between Fluor and Quanta Services

Considering the 90-day investment horizon Fluor is expected to under-perform the Quanta Services. But the stock apears to be less risky and, when comparing its historical volatility, Fluor is 1.05 times less risky than Quanta Services. The stock trades about -0.13 of its potential returns per unit of risk. The Quanta Services is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  32,304  in Quanta Services on December 27, 2024 and sell it today you would lose (6,240) from holding Quanta Services or give up 19.32% 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.  Quanta Services

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.

Quanta Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quanta Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic 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.

Pair Trading with Fluor and Quanta Services

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

The idea behind Fluor and Quanta Services 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.