Correlation Between TechnipFMC Plc and METISA Metalrgica

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

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

Diversification Opportunities for TechnipFMC Plc and METISA Metalrgica

-0.79

Correlation Coefficient

TechnipFMC Plc  METISA Metalrgica

Pay attention - limited upside

The 3 months correlation between TechnipFMC and METISA is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC plc and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica 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 METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of TechnipFMC Plc i.e., TechnipFMC Plc and METISA Metalrgica go up and down completely randomly.

Pair Corralation between TechnipFMC Plc and METISA Metalrgica

Assuming the 90 days trading horizon TechnipFMC plc is expected to under-perform the METISA Metalrgica. In addition to that, TechnipFMC Plc is 1.17 times more volatile than METISA Metalrgica Timboense. It trades about -0.08 of its total potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about 0.16 per unit of volatility. If you would invest  3,643  in METISA Metalrgica Timboense on December 26, 2024 and sell it today you would earn a total of  531.00  from holding METISA Metalrgica Timboense or generate 14.58% return on investment over 90 days.

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

TechnipFMC plc  vs.  METISA Metalrgica Timboense

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.

METISA Metalrgica

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TechnipFMC Plc and METISA Metalrgica

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

The idea behind TechnipFMC plc and METISA Metalrgica Timboense 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.