Correlation Between Weatherford International and TechnipFMC PLC
Can any of the company-specific risk be diversified away by investing in both Weatherford International 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 Weatherford International and TechnipFMC PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weatherford International PLC and TechnipFMC PLC, you can compare the effects of market volatilities on Weatherford International 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 Weatherford International with a short position of TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and TechnipFMC PLC.
Diversification Opportunities for Weatherford International and TechnipFMC PLC
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Weatherford and TechnipFMC is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC and Weatherford International 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 Weatherford International PLC 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 Weatherford International i.e., Weatherford International and TechnipFMC PLC go up and down completely randomly.
Pair Corralation between Weatherford International and TechnipFMC PLC
Given the investment horizon of 90 days Weatherford International is expected to generate 2.86 times less return on investment than TechnipFMC PLC. In addition to that, Weatherford International is 1.69 times more volatile than TechnipFMC PLC. It trades about 0.09 of its total potential returns per unit of risk. TechnipFMC PLC is currently generating about 0.43 per unit of volatility. If you would invest 2,512 in TechnipFMC PLC on August 24, 2024 and sell it today you would earn a total of 490.00 from holding TechnipFMC PLC or generate 19.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weatherford International PLC vs. TechnipFMC PLC
Performance |
| Timeline |
| Weatherford International |
| TechnipFMC PLC |
Weatherford International and TechnipFMC PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and TechnipFMC PLC
The main advantage of trading using opposite Weatherford International and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International 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.| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
| TechnipFMC PLC vs. Oceaneering International | TechnipFMC PLC vs. NOV Inc | TechnipFMC PLC vs. Flowserve | TechnipFMC PLC vs. Core Laboratories NV |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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