Correlation Between TechnipFMC PLC and USA Compression
Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC and USA Compression 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 USA Compression into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC PLC and USA Compression Partners, you can compare the effects of market volatilities on TechnipFMC PLC and USA Compression 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 USA Compression. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and USA Compression.
Diversification Opportunities for TechnipFMC PLC and USA Compression
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TechnipFMC and USA is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and USA Compression Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Compression Partners 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 USA Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Compression Partners has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and USA Compression go up and down completely randomly.
Pair Corralation between TechnipFMC PLC and USA Compression
Considering the 90-day investment horizon TechnipFMC PLC is expected to generate 1.5 times more return on investment than USA Compression. However, TechnipFMC PLC is 1.5 times more volatile than USA Compression Partners. It trades about 0.21 of its potential returns per unit of risk. USA Compression Partners is currently generating about 0.13 per unit of risk. If you would invest 2,618 in TechnipFMC PLC on August 30, 2024 and sell it today you would earn a total of 483.00 from holding TechnipFMC PLC or generate 18.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TechnipFMC PLC vs. USA Compression Partners
Performance |
| Timeline |
| TechnipFMC PLC |
| USA Compression Partners |
TechnipFMC PLC and USA Compression Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TechnipFMC PLC and USA Compression
The main advantage of trading using opposite TechnipFMC PLC and USA Compression positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC position performs unexpectedly, USA Compression 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 USA Compression will offset losses from the drop in USA Compression's long position.| TechnipFMC PLC vs. Oceaneering International | TechnipFMC PLC vs. NOV Inc | TechnipFMC PLC vs. Flowserve | TechnipFMC PLC vs. Core Laboratories NV |
| USA Compression vs. Now Inc | USA Compression vs. Oil States International | USA Compression vs. Oceaneering International | USA Compression vs. Geospace Technologies |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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