Correlation Between 5E Advanced and Select Energy

Can any of the company-specific risk be diversified away by investing in both 5E Advanced and Select Energy 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 5E Advanced and Select Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 5E Advanced Materials and Select Energy Services, you can compare the effects of market volatilities on 5E Advanced and Select Energy 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 5E Advanced with a short position of Select Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5E Advanced and Select Energy.

Diversification Opportunities for 5E Advanced and Select Energy

-0.57

Correlation Coefficient

5E Advanced  Select Energy

Excellent diversification

The 3 months correlation between FEAM and Select is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding 5E Advanced Materials and Select Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Energy Services and 5E Advanced 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 5E Advanced Materials are associated (or correlated) with Select Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Energy Services has no effect on the direction of 5E Advanced i.e., 5E Advanced and Select Energy go up and down completely randomly.

Pair Corralation between 5E Advanced and Select Energy

Given the investment horizon of 90 days 5E Advanced Materials is expected to under-perform the Select Energy. In addition to that, 5E Advanced is 2.08 times more volatile than Select Energy Services. It trades about -0.09 of its total potential returns per unit of risk. Select Energy Services is currently generating about 0.06 per unit of volatility. If you would invest  828.00  in Select Energy Services on May 3, 2025 and sell it today you would earn a total of  73.00  from holding Select Energy Services or generate 8.82% return on investment over 90 days.

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

5E Advanced Materials  vs.  Select Energy Services

5E Advanced Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days 5E Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Select Energy Services

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Select Energy Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Select Energy may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with 5E Advanced and Select Energy

The main advantage of trading using opposite 5E Advanced and Select Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5E Advanced position performs unexpectedly, Select Energy 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 Select Energy will offset losses from the drop in Select Energy's long position.

The idea behind 5E Advanced Materials and Select Energy 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.