Correlation Between NOV and Technip Energies

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

By analyzing existing cross correlation between NOV Inc and Technip Energies NV, you can compare the effects of market volatilities on NOV and Technip Energies 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 NOV with a short position of Technip Energies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOV and Technip Energies.

Diversification Opportunities for NOV and Technip Energies

-0.31

Correlation Coefficient

NOV  Technip Energies

Very good diversification

The 3 months correlation between NOV and Technip is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NOV Inc and Technip Energies NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technip Energies and NOV 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 NOV Inc are associated (or correlated) with Technip Energies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technip Energies has no effect on the direction of NOV i.e., NOV and Technip Energies go up and down completely randomly.

Pair Corralation between NOV and Technip Energies

Considering the 90-day investment horizon NOV Inc is expected to generate 0.66 times more return on investment than Technip Energies. However, NOV Inc is 1.51 times less risky than Technip Energies. It trades about 0.37 of its potential returns per unit of risk. Technip Energies NV is currently generating about 0.22 per unit of risk. If you would invest  1,432  in NOV Inc on October 23, 2024 and sell it today you would earn a total of  120.00  from holding NOV Inc or generate 8.38% return on investment over 90 days.

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

NOV Inc  vs.  Technip Energies NV

NOV Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NOV Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, NOV is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Technip Energies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Technip Energies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NOV and Technip Energies

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

The idea behind NOV Inc and Technip Energies NV 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.