Correlation Between TechnipFMC PLC and Nextier Oilfield
Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC and Nextier Oilfield 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 Nextier Oilfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC PLC and Nextier Oilfield Solutions, you can compare the effects of market volatilities on TechnipFMC PLC and Nextier Oilfield 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 Nextier Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and Nextier Oilfield.
Diversification Opportunities for TechnipFMC PLC and Nextier Oilfield
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TechnipFMC and Nextier is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Nextier Oilfield Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextier Oilfield Sol 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 Nextier Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextier Oilfield Sol has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Nextier Oilfield go up and down completely randomly.
Pair Corralation between TechnipFMC PLC and Nextier Oilfield
Considering the 90-day investment horizon TechnipFMC PLC is expected to generate 0.64 times more return on investment than Nextier Oilfield. However, TechnipFMC PLC is 1.57 times less risky than Nextier Oilfield. It trades about 0.1 of its potential returns per unit of risk. Nextier Oilfield Solutions is currently generating about 0.05 per unit of risk. If you would invest 1,176 in TechnipFMC PLC on August 27, 2024 and sell it today you would earn a total of 1,907 from holding TechnipFMC PLC or generate 162.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.85% |
| Values | Daily Returns |
TechnipFMC PLC vs. Nextier Oilfield Solutions
Performance |
| Timeline |
| TechnipFMC PLC |
| Nextier Oilfield Sol |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
TechnipFMC PLC and Nextier Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TechnipFMC PLC and Nextier Oilfield
The main advantage of trading using opposite TechnipFMC PLC and Nextier Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC position performs unexpectedly, Nextier Oilfield 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 Nextier Oilfield will offset losses from the drop in Nextier Oilfield's long position.| TechnipFMC PLC vs. Oceaneering International | TechnipFMC PLC vs. NOV Inc | TechnipFMC PLC vs. Flowserve | TechnipFMC PLC vs. Core Laboratories NV |
| Nextier Oilfield vs. ProPetro Holding Corp | Nextier Oilfield vs. Select Energy Services | Nextier Oilfield vs. Liberty Oilfield Services | Nextier Oilfield vs. Cactus Inc |
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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