Correlation Between TechnipFMC PLC and Dow Jones
Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC PLC and Dow Jones Industrial, you can compare the effects of market volatilities on TechnipFMC PLC and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and Dow Jones.
Diversification Opportunities for TechnipFMC PLC and Dow Jones
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TechnipFMC and Dow is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Dow Jones go up and down completely randomly.
Pair Corralation between TechnipFMC PLC and Dow Jones
Assuming the 90 days trading horizon TechnipFMC PLC is expected to generate 6.21 times more return on investment than Dow Jones. However, TechnipFMC PLC is 6.21 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 655.00 in TechnipFMC PLC on August 26, 2024 and sell it today you would earn a total of 2,203 from holding TechnipFMC PLC or generate 336.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
TechnipFMC PLC vs. Dow Jones Industrial
Performance |
| Timeline |
TechnipFMC PLC and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
TechnipFMC PLC
Pair trading matchups for TechnipFMC PLC
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with TechnipFMC PLC and Dow Jones
The main advantage of trading using opposite TechnipFMC PLC and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| TechnipFMC PLC vs. Zoom Video Communications | TechnipFMC PLC vs. Enbridge | TechnipFMC PLC vs. Endo International PLC | TechnipFMC PLC vs. Diversified Energy |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |