Correlation Between Forum Energy and MRC Global

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

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

Diversification Opportunities for Forum Energy and MRC Global

0.39

Correlation Coefficient

Forum Energy  MRC Global

Weak diversification

The 3 months correlation between Forum and MRC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Technologies and MRC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Global and Forum Energy 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 Forum Energy Technologies are associated (or correlated) with MRC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRC Global has no effect on the direction of Forum Energy i.e., Forum Energy and MRC Global go up and down completely randomly.

Pair Corralation between Forum Energy and MRC Global

Considering the 90-day investment horizon Forum Energy Technologies is expected to under-perform the MRC Global. In addition to that, Forum Energy is 1.41 times more volatile than MRC Global. It trades about -0.06 of its total potential returns per unit of risk. MRC Global is currently generating about 0.01 per unit of volatility. If you would invest  1,305  in MRC Global on February 18, 2025 and sell it today you would lose (25.00) from holding MRC Global or give up 1.92% of portfolio value over 90 days.

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

Forum Energy Technologies  vs.  MRC Global

Forum Energy Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forum Energy Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MRC Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days MRC Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MRC Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Forum Energy and MRC Global

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

The idea behind Forum Energy Technologies and MRC Global 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.