Correlation Between Basic Materials and TechnipFMC Plc
Can any of the company-specific risk be diversified away by investing in both Basic Materials 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 Basic Materials and TechnipFMC Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and TechnipFMC plc, you can compare the effects of market volatilities on Basic Materials 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 Basic Materials with a short position of TechnipFMC Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and TechnipFMC Plc.
Diversification Opportunities for Basic Materials and TechnipFMC Plc
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Basic and TechnipFMC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and TechnipFMC plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC plc and Basic Materials 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 Basic Materials 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 Basic Materials i.e., Basic Materials and TechnipFMC Plc go up and down completely randomly.
Pair Corralation between Basic Materials and TechnipFMC Plc
Assuming the 90 days trading horizon Basic Materials is expected to under-perform the TechnipFMC Plc. But the index apears to be less risky and, when comparing its historical volatility, Basic Materials is 1.59 times less risky than TechnipFMC Plc. The index trades about -0.65 of its potential returns per unit of risk. The TechnipFMC plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 19,021 in TechnipFMC plc on October 12, 2024 and sell it today you would earn a total of 143.00 from holding TechnipFMC plc or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Basic Materials vs. TechnipFMC plc
Performance |
| Timeline |
Basic Materials and TechnipFMC Plc Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
TechnipFMC plc
Pair trading matchups for TechnipFMC Plc
Pair Trading with Basic Materials and TechnipFMC Plc
The main advantage of trading using opposite Basic Materials and TechnipFMC Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials 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.| Basic Materials vs. Capital One Financial | Basic Materials vs. Broadridge Financial Solutions, | Basic Materials vs. Truist Financial | Basic Materials vs. Discover Financial Services |
| TechnipFMC Plc vs. Schlumberger Limited | TechnipFMC Plc vs. Energisa SA | TechnipFMC Plc vs. BTG Pactual Logstica | TechnipFMC Plc vs. Plano Plano Desenvolvimento |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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