Correlation Between TechnipFMC PLC and Anglo American
Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC and Anglo American 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 Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC PLC and Anglo American PLC, you can compare the effects of market volatilities on TechnipFMC PLC and Anglo American 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 Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and Anglo American.
Diversification Opportunities for TechnipFMC PLC and Anglo American
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TechnipFMC and Anglo is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Anglo American PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American PLC 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 Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American PLC has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Anglo American go up and down completely randomly.
Pair Corralation between TechnipFMC PLC and Anglo American
Assuming the 90 days trading horizon TechnipFMC PLC is expected to generate 1.11 times less return on investment than Anglo American. But when comparing it to its historical volatility, TechnipFMC PLC is 1.17 times less risky than Anglo American. It trades about 0.19 of its potential returns per unit of risk. Anglo American PLC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 232,650 in Anglo American PLC on September 12, 2024 and sell it today you would earn a total of 17,850 from holding Anglo American PLC or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
TechnipFMC PLC vs. Anglo American PLC
Performance |
| Timeline |
| TechnipFMC PLC |
| Anglo American PLC |
TechnipFMC PLC and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TechnipFMC PLC and Anglo American
The main advantage of trading using opposite TechnipFMC PLC and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| TechnipFMC PLC vs. Zoom Video Communications | TechnipFMC PLC vs. Neometals | TechnipFMC PLC vs. Coor Service Management | TechnipFMC PLC vs. Fidelity Sustainable USD |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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