Correlation Between Cactus and TechnipFMC PLC
Can any of the company-specific risk be diversified away by investing in both Cactus 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 Cactus and TechnipFMC PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Inc and TechnipFMC PLC, you can compare the effects of market volatilities on Cactus 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 Cactus with a short position of TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and TechnipFMC PLC.
Diversification Opportunities for Cactus and TechnipFMC PLC
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cactus and TechnipFMC is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC and Cactus 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 Cactus Inc 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 Cactus i.e., Cactus and TechnipFMC PLC go up and down completely randomly.
Pair Corralation between Cactus and TechnipFMC PLC
Considering the 90-day investment horizon Cactus Inc is expected to generate 1.73 times more return on investment than TechnipFMC PLC. However, Cactus is 1.73 times more volatile than TechnipFMC PLC. It trades about 0.29 of its potential returns per unit of risk. TechnipFMC PLC is currently generating about 0.43 per unit of risk. If you would invest 5,759 in Cactus Inc on August 28, 2024 and sell it today you would earn a total of 1,190 from holding Cactus Inc or generate 20.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cactus Inc vs. TechnipFMC PLC
Performance |
| Timeline |
| Cactus Inc |
| TechnipFMC PLC |
Cactus and TechnipFMC PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus and TechnipFMC PLC
The main advantage of trading using opposite Cactus and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus 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.| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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