Correlation Between TechnipFMC Plc and United Natural
Can any of the company-specific risk be diversified away by investing in both TechnipFMC Plc and United Natural 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 United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC plc and United Natural Foods,, you can compare the effects of market volatilities on TechnipFMC Plc and United Natural 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 United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC Plc and United Natural.
Diversification Opportunities for TechnipFMC Plc and United Natural
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TechnipFMC and United is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC plc and United Natural Foods, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods, 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 United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods, has no effect on the direction of TechnipFMC Plc i.e., TechnipFMC Plc and United Natural go up and down completely randomly.
Pair Corralation between TechnipFMC Plc and United Natural
Assuming the 90 days trading horizon TechnipFMC Plc is expected to generate 2.75 times less return on investment than United Natural. But when comparing it to its historical volatility, TechnipFMC plc is 1.88 times less risky than United Natural. It trades about 0.1 of its potential returns per unit of risk. United Natural Foods, is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,818 in United Natural Foods, on October 30, 2024 and sell it today you would earn a total of 1,382 from holding United Natural Foods, or generate 49.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 54.86% |
| Values | Daily Returns |
TechnipFMC plc vs. United Natural Foods,
Performance |
| Timeline |
| TechnipFMC plc |
| United Natural Foods, |
TechnipFMC Plc and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TechnipFMC Plc and United Natural
The main advantage of trading using opposite TechnipFMC Plc and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC Plc position performs unexpectedly, United Natural 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 United Natural will offset losses from the drop in United Natural's long position.| TechnipFMC Plc vs. British American Tobacco | TechnipFMC Plc vs. salesforce inc | TechnipFMC Plc vs. Ryanair Holdings plc | TechnipFMC Plc vs. Westinghouse Air Brake |
| United Natural vs. Taiwan Semiconductor Manufacturing | United Natural vs. Apple Inc | United Natural vs. Alibaba Group Holding | United Natural vs. Microsoft |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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