Correlation Between TechnipFMC PLC and Fannie Mae
Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC and Fannie Mae 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 Fannie Mae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC PLC and Fannie Mae, you can compare the effects of market volatilities on TechnipFMC PLC and Fannie Mae 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 Fannie Mae. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and Fannie Mae.
Diversification Opportunities for TechnipFMC PLC and Fannie Mae
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TechnipFMC and Fannie is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Fannie Mae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fannie Mae 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 Fannie Mae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fannie Mae has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Fannie Mae go up and down completely randomly.
Pair Corralation between TechnipFMC PLC and Fannie Mae
Assuming the 90 days trading horizon TechnipFMC PLC is expected to generate 0.25 times more return on investment than Fannie Mae. However, TechnipFMC PLC is 3.98 times less risky than Fannie Mae. It trades about -0.16 of its potential returns per unit of risk. Fannie Mae is currently generating about -0.19 per unit of risk. If you would invest 2,913 in TechnipFMC PLC on September 25, 2024 and sell it today you would lose (163.00) from holding TechnipFMC PLC or give up 5.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 90.48% |
| Values | Daily Returns |
TechnipFMC PLC vs. Fannie Mae
Performance |
| Timeline |
| TechnipFMC PLC |
| Fannie Mae |
TechnipFMC PLC and Fannie Mae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TechnipFMC PLC and Fannie Mae
The main advantage of trading using opposite TechnipFMC PLC and Fannie Mae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC position performs unexpectedly, Fannie Mae 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 Fannie Mae will offset losses from the drop in Fannie Mae's long position.| TechnipFMC PLC vs. Zoom Video Communications | TechnipFMC PLC vs. Enbridge | TechnipFMC PLC vs. Endo International PLC | TechnipFMC PLC vs. Balfour Beatty plc |
| Fannie Mae vs. Uniper SE | Fannie Mae vs. Mulberry Group PLC | Fannie Mae vs. London Security Plc | Fannie Mae 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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