Correlation Between Fator IFIX and TechnipFMC Plc

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

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

Diversification Opportunities for Fator IFIX and TechnipFMC Plc

-0.83

Correlation Coefficient

Fator IFIX  TechnipFMC Plc

Pay attention - limited upside

The 3 months correlation between Fator and TechnipFMC is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fator IFIX Fundo and TechnipFMC plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC plc and Fator IFIX 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 Fator IFIX Fundo 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 Fator IFIX i.e., Fator IFIX and TechnipFMC Plc go up and down completely randomly.

Pair Corralation between Fator IFIX and TechnipFMC Plc

Assuming the 90 days trading horizon Fator IFIX Fundo is expected to generate 1.44 times more return on investment than TechnipFMC Plc. However, Fator IFIX is 1.44 times more volatile than TechnipFMC plc. It trades about 0.0 of its potential returns per unit of risk. TechnipFMC plc is currently generating about -0.01 per unit of risk. If you would invest  4,820  in Fator IFIX Fundo on October 6, 2024 and sell it today you would lose (28.00) from holding Fator IFIX Fundo or give up 0.58% of portfolio value over 90 days.

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

Fator IFIX Fundo  vs.  TechnipFMC plc

Fator IFIX Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fator IFIX Fundo has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund 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 Fator IFIX and TechnipFMC Plc

The main advantage of trading using opposite Fator IFIX and TechnipFMC Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fator IFIX 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 Fator IFIX Fundo 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.