Correlation Between TechnipFMC PLC and Symphony Environmental

Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC and Symphony Environmental 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 Symphony Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TechnipFMC PLC and Symphony Environmental Technologies, you can compare the effects of market volatilities on TechnipFMC PLC and Symphony Environmental 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 Symphony Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and Symphony Environmental.

Diversification Opportunities for TechnipFMC PLC and Symphony Environmental

0.41

Correlation Coefficient

TechnipFMC PLC  Symphony Environmental

Very weak diversification

The 3 months correlation between TechnipFMC and Symphony is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Symphony Environmental Technol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symphony Environmental 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 Symphony Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symphony Environmental has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Symphony Environmental go up and down completely randomly.

Pair Corralation between TechnipFMC PLC and Symphony Environmental

Assuming the 90 days trading horizon TechnipFMC PLC is expected to generate 0.85 times more return on investment than Symphony Environmental. However, TechnipFMC PLC is 1.18 times less risky than Symphony Environmental. It trades about -0.04 of its potential returns per unit of risk. Symphony Environmental Technologies is currently generating about -0.07 per unit of risk. If you would invest  3,005  in TechnipFMC PLC on December 3, 2024 and sell it today you would lose (188.00) from holding TechnipFMC PLC or give up 6.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

TechnipFMC PLC  vs.  Symphony Environmental Technol

TechnipFMC PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days TechnipFMC PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TechnipFMC PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Symphony Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Symphony Environmental Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with TechnipFMC PLC and Symphony Environmental

The main advantage of trading using opposite TechnipFMC PLC and Symphony Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC position performs unexpectedly, Symphony Environmental 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 Symphony Environmental will offset losses from the drop in Symphony Environmental's long position.

The idea behind TechnipFMC PLC and Symphony Environmental Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.