Correlation Between Monks Investment and TechnipFMC PLC

Can any of the company-specific risk be diversified away by investing in both Monks 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 Monks 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 Monks Investment Trust and TechnipFMC PLC, you can compare the effects of market volatilities on Monks 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 Monks Investment with a short position of TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and TechnipFMC PLC.

Diversification Opportunities for Monks Investment and TechnipFMC PLC

0.27

Correlation Coefficient

Monks Investment  TechnipFMC PLC

Modest diversification

The 3 months correlation between Monks and TechnipFMC is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC and Monks 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 Monks Investment Trust 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 Monks Investment i.e., Monks Investment and TechnipFMC PLC go up and down completely randomly.

Pair Corralation between Monks Investment and TechnipFMC PLC

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.46 times more return on investment than TechnipFMC PLC. However, Monks Investment Trust is 2.18 times less risky than TechnipFMC PLC. It trades about -0.22 of its potential returns per unit of risk. TechnipFMC PLC is currently generating about -0.28 per unit of risk. If you would invest  132,400  in Monks Investment Trust on December 6, 2024 and sell it today you would lose (8,800) from holding Monks Investment Trust or give up 6.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Monks Investment Trust  vs.  TechnipFMC PLC

Monks Investment Trust

Risk-Adjusted Performance

Very Weak

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

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Monks Investment and TechnipFMC PLC

The main advantage of trading using opposite Monks Investment and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks 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 Monks Investment Trust 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.