Correlation Between TechnipFMC PLC and Solaris Oilfield

Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC and Solaris 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 Solaris 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 Solaris Oilfield Infrastructure, you can compare the effects of market volatilities on TechnipFMC PLC and Solaris 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 Solaris Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and Solaris Oilfield.

Diversification Opportunities for TechnipFMC PLC and Solaris Oilfield

0.36

Correlation Coefficient

TechnipFMC PLC  Solaris Oilfield

Weak diversification

The 3 months correlation between TechnipFMC and Solaris is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Solaris Oilfield Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaris Oilfield Inf 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 Solaris Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaris Oilfield Inf has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Solaris Oilfield go up and down completely randomly.

Pair Corralation between TechnipFMC PLC and Solaris Oilfield

If you would invest  1,152  in Solaris Oilfield Infrastructure on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Solaris Oilfield Infrastructure or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

TechnipFMC PLC  vs.  Solaris Oilfield Infrastructur

TechnipFMC PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, TechnipFMC PLC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Solaris Oilfield Inf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solaris Oilfield Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Solaris Oilfield is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with TechnipFMC PLC and Solaris Oilfield

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

The idea behind TechnipFMC PLC and Solaris Oilfield Infrastructure 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.