Correlation Between Now and TechnipFMC PLC
Can any of the company-specific risk be diversified away by investing in both Now and TechnipFMC PLC 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 Now and TechnipFMC PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Now Inc and TechnipFMC PLC, you can compare the effects of market volatilities on Now and TechnipFMC PLC 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 Now with a short position of TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now and TechnipFMC PLC.
Diversification Opportunities for Now and TechnipFMC PLC
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Now and TechnipFMC is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Now Inc and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC and Now 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 Now Inc are associated (or correlated) with TechnipFMC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC PLC has no effect on the direction of Now i.e., Now and TechnipFMC PLC go up and down completely randomly.
Pair Corralation between Now and TechnipFMC PLC
Given the investment horizon of 90 days Now is expected to generate 2.92 times less return on investment than TechnipFMC PLC. In addition to that, Now is 1.07 times more volatile than TechnipFMC PLC. It trades about 0.02 of its total potential returns per unit of risk. TechnipFMC PLC is currently generating about 0.06 per unit of volatility. If you would invest 2,619 in TechnipFMC PLC on August 24, 2024 and sell it today you would earn a total of 383.00 from holding TechnipFMC PLC or generate 14.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Now Inc vs. TechnipFMC PLC
Performance |
| Timeline |
| Now Inc |
| TechnipFMC PLC |
Now and TechnipFMC PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Now and TechnipFMC PLC
The main advantage of trading using opposite Now and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Now position performs unexpectedly, TechnipFMC PLC 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 TechnipFMC PLC will offset losses from the drop in TechnipFMC PLC's long position.| Now vs. Oil States International | Now vs. Oceaneering International | Now vs. Geospace Technologies | Now vs. Newpark Resources |
| TechnipFMC PLC vs. Bristow Group | TechnipFMC PLC vs. RPC Inc | TechnipFMC PLC vs. NOV Inc | TechnipFMC PLC vs. Oceaneering International |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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