Correlation Between FutureFuel Corp and Methes Energies

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

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

Diversification Opportunities for FutureFuel Corp and Methes Energies

0.0

Correlation Coefficient

FutureFuel Corp  Methes Energies

Pay attention - limited upside

The 3 months correlation between FutureFuel and Methes is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FutureFuel Corp and Methes Energies International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methes Energies Inte and FutureFuel Corp 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 FutureFuel Corp are associated (or correlated) with Methes Energies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methes Energies Inte has no effect on the direction of FutureFuel Corp i.e., FutureFuel Corp and Methes Energies go up and down completely randomly.

Pair Corralation between FutureFuel Corp and Methes Energies

If you would invest  408.00  in FutureFuel Corp on February 9, 2024 and sell it today you would earn a total of  151.00  from holding FutureFuel Corp or generate 37.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

FutureFuel Corp  vs.  Methes Energies International

FutureFuel Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FutureFuel Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, FutureFuel Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Methes Energies Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Methes Energies International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Methes Energies is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with FutureFuel Corp and Methes Energies

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

The idea behind FutureFuel Corp and Methes Energies 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.