Correlation Between TechnipFMC PLC and Saipem SpA
Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC and Saipem SpA 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 Saipem SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC PLC and Saipem SpA, you can compare the effects of market volatilities on TechnipFMC PLC and Saipem SpA 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 Saipem SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and Saipem SpA.
Diversification Opportunities for TechnipFMC PLC and Saipem SpA
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TechnipFMC and Saipem is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Saipem SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saipem SpA 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 Saipem SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saipem SpA has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Saipem SpA go up and down completely randomly.
Pair Corralation between TechnipFMC PLC and Saipem SpA
Considering the 90-day investment horizon TechnipFMC PLC is expected to generate 0.84 times more return on investment than Saipem SpA. However, TechnipFMC PLC is 1.18 times less risky than Saipem SpA. It trades about 0.44 of its potential returns per unit of risk. Saipem SpA is currently generating about 0.3 per unit of risk. If you would invest 2,604 in TechnipFMC PLC on August 31, 2024 and sell it today you would earn a total of 497.00 from holding TechnipFMC PLC or generate 19.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TechnipFMC PLC vs. Saipem SpA
Performance |
| Timeline |
| TechnipFMC PLC |
| Saipem SpA |
TechnipFMC PLC and Saipem SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TechnipFMC PLC and Saipem SpA
The main advantage of trading using opposite TechnipFMC PLC and Saipem SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC position performs unexpectedly, Saipem SpA 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 Saipem SpA will offset losses from the drop in Saipem SpA's long position.| TechnipFMC PLC vs. Oceaneering International | TechnipFMC PLC vs. NOV Inc | TechnipFMC PLC vs. Flowserve | TechnipFMC PLC vs. Core Laboratories NV |
| Saipem SpA vs. Expro Group Holdings | Saipem SpA vs. ChampionX | Saipem SpA vs. Ranger Energy Services | Saipem SpA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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