Correlation Between TechnipFMC Plc and Mid America

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

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

Diversification Opportunities for TechnipFMC Plc and Mid America

0.37

Correlation Coefficient

TechnipFMC Plc  Mid America

Weak diversification

The 3 months correlation between TechnipFMC and Mid is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC plc and Mid America Apartment Communit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid America Apartment 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 Mid America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid America Apartment has no effect on the direction of TechnipFMC Plc i.e., TechnipFMC Plc and Mid America go up and down completely randomly.

Pair Corralation between TechnipFMC Plc and Mid America

Assuming the 90 days trading horizon TechnipFMC plc is expected to generate 1.54 times more return on investment than Mid America. However, TechnipFMC Plc is 1.54 times more volatile than Mid America Apartment Communities. It trades about 0.26 of its potential returns per unit of risk. Mid America Apartment Communities is currently generating about 0.07 per unit of risk. If you would invest  15,034  in TechnipFMC plc on October 24, 2024 and sell it today you would earn a total of  4,240  from holding TechnipFMC plc or generate 28.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

TechnipFMC plc  vs.  Mid America Apartment Communit

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.

Mid America Apartment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mid America Apartment Communities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mid America is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TechnipFMC Plc and Mid America

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

The idea behind TechnipFMC plc and Mid America Apartment Communities 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.