Correlation Between TechnipFMC Plc and Ares Management
Can any of the company-specific risk be diversified away by investing in both TechnipFMC Plc and Ares Management 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 Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC plc and Ares Management, you can compare the effects of market volatilities on TechnipFMC Plc and Ares Management 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 Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC Plc and Ares Management.
Diversification Opportunities for TechnipFMC Plc and Ares Management
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TechnipFMC and Ares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC plc and Ares Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management 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 Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management has no effect on the direction of TechnipFMC Plc i.e., TechnipFMC Plc and Ares Management go up and down completely randomly.
Pair Corralation between TechnipFMC Plc and Ares Management
Assuming the 90 days trading horizon TechnipFMC plc is expected to generate 0.97 times more return on investment than Ares Management. However, TechnipFMC plc is 1.03 times less risky than Ares Management. It trades about 0.03 of its potential returns per unit of risk. Ares Management is currently generating about -0.01 per unit of risk. 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TechnipFMC plc vs. Ares Management
Performance |
| Timeline |
| TechnipFMC plc |
| Ares Management |
TechnipFMC Plc and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TechnipFMC Plc and Ares Management
The main advantage of trading using opposite TechnipFMC Plc and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC Plc position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| TechnipFMC Plc vs. Schlumberger Limited | TechnipFMC Plc vs. Energisa SA | TechnipFMC Plc vs. BTG Pactual Logstica | TechnipFMC Plc vs. Plano Plano Desenvolvimento |
| Ares Management vs. Verizon Communications | Ares Management vs. Bemobi Mobile Tech | Ares Management vs. Take Two Interactive Software | Ares Management vs. Guidewire Software, |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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