Correlation Between CDL INVESTMENT and TechnipFMC PLC

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

By analyzing existing cross correlation between CDL INVESTMENT and TechnipFMC PLC, you can compare the effects of market volatilities on CDL INVESTMENT 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 CDL INVESTMENT with a short position of TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDL INVESTMENT and TechnipFMC PLC.

Diversification Opportunities for CDL INVESTMENT and TechnipFMC PLC

0.35

Correlation Coefficient

CDL INVESTMENT  TechnipFMC PLC

Weak diversification

The 3 months correlation between CDL and TechnipFMC is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CDL INVESTMENT and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC and CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT i.e., CDL INVESTMENT and TechnipFMC PLC go up and down completely randomly.

Pair Corralation between CDL INVESTMENT and TechnipFMC PLC

Assuming the 90 days trading horizon CDL INVESTMENT is expected to generate 0.89 times more return on investment than TechnipFMC PLC. However, CDL INVESTMENT is 1.12 times less risky than TechnipFMC PLC. It trades about 0.09 of its potential returns per unit of risk. TechnipFMC PLC is currently generating about -0.17 per unit of risk. If you would invest  43.00  in CDL INVESTMENT on September 27, 2024 and sell it today you would earn a total of  1.00  from holding CDL INVESTMENT or generate 2.33% return on investment over 90 days.

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

CDL INVESTMENT  vs.  TechnipFMC PLC

CDL INVESTMENT

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CDL INVESTMENT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CDL INVESTMENT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

TechnipFMC PLC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, TechnipFMC PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CDL INVESTMENT and TechnipFMC PLC

The main advantage of trading using opposite CDL INVESTMENT and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDL INVESTMENT 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 CDL INVESTMENT 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.