Correlation Between Fundo De and TechnipFMC Plc

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

By analyzing existing cross correlation between Fundo de Investimento and TechnipFMC plc, you can compare the effects of market volatilities on Fundo De 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 Fundo De with a short position of TechnipFMC Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundo De and TechnipFMC Plc.

Diversification Opportunities for Fundo De and TechnipFMC Plc

-0.26

Correlation Coefficient

Fundo De  TechnipFMC Plc

Very good diversification

The 3 months correlation between Fundo and TechnipFMC is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fundo de Investimento and TechnipFMC plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC plc and Fundo De 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 Fundo de Investimento 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 Fundo De i.e., Fundo De and TechnipFMC Plc go up and down completely randomly.

Pair Corralation between Fundo De and TechnipFMC Plc

Assuming the 90 days trading horizon Fundo de Investimento is expected to generate 0.61 times more return on investment than TechnipFMC Plc. However, Fundo de Investimento is 1.63 times less risky than TechnipFMC Plc. It trades about 0.02 of its potential returns per unit of risk. TechnipFMC plc is currently generating about -0.01 per unit of risk. If you would invest  9,693  in Fundo de Investimento on October 6, 2024 and sell it today you would earn a total of  29.00  from holding Fundo de Investimento or generate 0.3% return on investment over 90 days.

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

Fundo de Investimento  vs.  TechnipFMC plc

Fundo de Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo de Investimento has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong essential indicators, Fundo De is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

TechnipFMC plc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC plc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, TechnipFMC Plc sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fundo De and TechnipFMC Plc

The main advantage of trading using opposite Fundo De and TechnipFMC Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundo De 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.

The idea behind Fundo de Investimento and TechnipFMC plc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.