Correlation Between First Responder and Calfrac Well

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

By analyzing existing cross correlation between First Responder Technologies and Calfrac Well Services, you can compare the effects of market volatilities on First Responder and Calfrac Well 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 First Responder with a short position of Calfrac Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Responder and Calfrac Well.

Diversification Opportunities for First Responder and Calfrac Well

0.04

Correlation Coefficient

First Responder  Calfrac Well

Significant diversification

The 3 months correlation between First and Calfrac is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Responder Technologies and Calfrac Well Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calfrac Well Services and First Responder 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 First Responder Technologies are associated (or correlated) with Calfrac Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calfrac Well Services has no effect on the direction of First Responder i.e., First Responder and Calfrac Well go up and down completely randomly.

Pair Corralation between First Responder and Calfrac Well

Assuming the 90 days horizon First Responder Technologies is expected to generate 58.31 times more return on investment than Calfrac Well. However, First Responder is 58.31 times more volatile than Calfrac Well Services. It trades about 0.21 of its potential returns per unit of risk. Calfrac Well Services is currently generating about -0.02 per unit of risk. If you would invest  21.00  in First Responder Technologies on February 3, 2025 and sell it today you would earn a total of  79.00  from holding First Responder Technologies or generate 376.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	54.69%
Values	Daily Returns

First Responder Technologies  vs.  Calfrac Well Services

First Responder Tech

Risk-Adjusted Performance

Solid

Over the last 90 days First Responder Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly abnormal basic indicators, First Responder reported solid returns over the last few months and may actually be approaching a breakup point.

Calfrac Well Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calfrac Well Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Calfrac Well is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Responder and Calfrac Well

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

The idea behind First Responder Technologies and Calfrac Well 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 Global Correlations module to find global opportunities by holding instruments from different markets.