Correlation Between TechnipFMC Plc and GP Investments

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

By analyzing existing cross correlation between TechnipFMC plc and GP Investments, you can compare the effects of market volatilities on TechnipFMC Plc and GP Investments 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 GP Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC Plc and GP Investments.

Diversification Opportunities for TechnipFMC Plc and GP Investments

-0.05

Correlation Coefficient

TechnipFMC Plc  GP Investments

Good diversification

The 3 months correlation between TechnipFMC and GPIV33 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC plc and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments 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 GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of TechnipFMC Plc i.e., TechnipFMC Plc and GP Investments go up and down completely randomly.

Pair Corralation between TechnipFMC Plc and GP Investments

Assuming the 90 days trading horizon TechnipFMC plc is expected to under-perform the GP Investments. But the stock apears to be less risky and, when comparing its historical volatility, TechnipFMC plc is 1.92 times less risky than GP Investments. The stock trades about -0.08 of its potential returns per unit of risk. The GP Investments is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  375.00  in GP Investments on December 26, 2024 and sell it today you would lose (10.00) from holding GP Investments or give up 2.67% of portfolio value over 90 days.

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

TechnipFMC plc  vs.  GP Investments

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. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GP Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days GP Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, GP Investments is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TechnipFMC Plc and GP Investments

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

The idea behind TechnipFMC plc and GP Investments 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.