Correlation Between Dawson Geophysical and TechnipFMC PLC

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Can any of the company-specific risk be diversified away by investing in both Dawson Geophysical 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 Dawson Geophysical and TechnipFMC PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dawson Geophysical and TechnipFMC PLC, you can compare the effects of market volatilities on Dawson Geophysical 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 Dawson Geophysical with a short position of TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawson Geophysical and TechnipFMC PLC.

Diversification Opportunities for Dawson Geophysical and TechnipFMC PLC

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Dawson and TechnipFMC is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dawson Geophysical and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC and Dawson Geophysical 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 Dawson Geophysical 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 Dawson Geophysical i.e., Dawson Geophysical and TechnipFMC PLC go up and down completely randomly.

Pair Corralation between Dawson Geophysical and TechnipFMC PLC

Given the investment horizon of 90 days Dawson Geophysical is expected to under-perform the TechnipFMC PLC. In addition to that, Dawson Geophysical is 1.87 times more volatile than TechnipFMC PLC. It trades about 0.0 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  3,073  in TechnipFMC PLC on October 7, 2024 and sell it today you would earn a total of  62.00  from holding TechnipFMC PLC or generate 2.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Dawson Geophysical  vs.  TechnipFMC PLC

 Performance 
       Timeline  
Dawson Geophysical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dawson Geophysical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
TechnipFMC PLC 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, TechnipFMC PLC demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Dawson Geophysical and TechnipFMC PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dawson Geophysical and TechnipFMC PLC

The main advantage of trading using opposite Dawson Geophysical and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawson Geophysical 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.
The idea behind Dawson Geophysical and TechnipFMC PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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