Correlation Between TechnipFMC PLC and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC and Fresenius Medical 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 TechnipFMC PLC and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC PLC and Fresenius Medical Care, you can compare the effects of market volatilities on TechnipFMC PLC and Fresenius Medical 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 TechnipFMC PLC with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and Fresenius Medical.
Diversification Opportunities for TechnipFMC PLC and Fresenius Medical
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TechnipFMC and Fresenius is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Fresenius Medical Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius Medical Care and TechnipFMC PLC 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 TechnipFMC PLC are associated (or correlated) with Fresenius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius Medical Care has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Fresenius Medical go up and down completely randomly.
Pair Corralation between TechnipFMC PLC and Fresenius Medical
Assuming the 90 days trading horizon TechnipFMC PLC is expected to generate 1.17 times more return on investment than Fresenius Medical. However, TechnipFMC PLC is 1.17 times more volatile than Fresenius Medical Care. It trades about 0.5 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.38 per unit of risk. If you would invest 2,444 in TechnipFMC PLC on September 2, 2024 and sell it today you would earn a total of 522.00 from holding TechnipFMC PLC or generate 21.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TechnipFMC PLC vs. Fresenius Medical Care
Performance |
| Timeline |
| TechnipFMC PLC |
| Fresenius Medical Care |
TechnipFMC PLC and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TechnipFMC PLC and Fresenius Medical
The main advantage of trading using opposite TechnipFMC PLC and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC position performs unexpectedly, Fresenius Medical 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 Fresenius Medical will offset losses from the drop in Fresenius Medical's long position.| TechnipFMC PLC vs. Zoom Video Communications | TechnipFMC PLC vs. Enbridge | TechnipFMC PLC vs. Endo International PLC | TechnipFMC PLC vs. Diversified Energy |
| Fresenius Medical vs. Uniper SE | Fresenius Medical vs. Mulberry Group PLC | Fresenius Medical vs. London Security Plc | Fresenius Medical vs. Triad Group PLC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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