Correlation Between TechnipFMC PLC and China Oilfield
Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC and China Oilfield 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 China Oilfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC PLC and China Oilfield Services, you can compare the effects of market volatilities on TechnipFMC PLC and China Oilfield 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 China Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and China Oilfield.
Diversification Opportunities for TechnipFMC PLC and China Oilfield
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TechnipFMC and China is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and China Oilfield Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Oilfield Services 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 China Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Oilfield Services has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and China Oilfield go up and down completely randomly.
Pair Corralation between TechnipFMC PLC and China Oilfield
Assuming the 90 days horizon TechnipFMC PLC is expected to generate 1.16 times more return on investment than China Oilfield. However, TechnipFMC PLC is 1.16 times more volatile than China Oilfield Services. It trades about -0.14 of its potential returns per unit of risk. China Oilfield Services is currently generating about -0.18 per unit of risk. If you would invest 2,912 in TechnipFMC PLC on September 25, 2024 and sell it today you would lose (141.00) from holding TechnipFMC PLC or give up 4.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
TechnipFMC PLC vs. China Oilfield Services
Performance |
Timeline |
TechnipFMC PLC |
China Oilfield Services |
TechnipFMC PLC and China Oilfield Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TechnipFMC PLC and China Oilfield
The main advantage of trading using opposite TechnipFMC PLC and China Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC position performs unexpectedly, China Oilfield 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 China Oilfield will offset losses from the drop in China Oilfield's long position.TechnipFMC PLC vs. Schlumberger Limited | TechnipFMC PLC vs. Halliburton | TechnipFMC PLC vs. Halliburton | TechnipFMC PLC vs. Baker Hughes Co |
China Oilfield vs. Schlumberger Limited | China Oilfield vs. Halliburton | China Oilfield vs. Halliburton | China Oilfield vs. Baker Hughes Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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