Correlation Between TechnipFMC Plc and Bio Techne

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

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

Diversification Opportunities for TechnipFMC Plc and Bio Techne

0.43

Correlation Coefficient

TechnipFMC Plc  Bio Techne

Very weak diversification

The 3 months correlation between TechnipFMC and Bio is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC plc and Bio Techne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Techne 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 Bio Techne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Techne has no effect on the direction of TechnipFMC Plc i.e., TechnipFMC Plc and Bio Techne go up and down completely randomly.

Pair Corralation between TechnipFMC Plc and Bio Techne

Assuming the 90 days trading horizon TechnipFMC plc is expected to generate 0.42 times more return on investment than Bio Techne. However, TechnipFMC plc is 2.38 times less risky than Bio Techne. It trades about 0.29 of its potential returns per unit of risk. Bio Techne is currently generating about 0.07 per unit of risk. If you would invest  15,034  in TechnipFMC plc on October 23, 2024 and sell it today you would earn a total of  4,626  from holding TechnipFMC plc or generate 30.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

TechnipFMC plc  vs.  Bio Techne

TechnipFMC plc

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC plc are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, TechnipFMC Plc sustained solid returns over the last few months and may actually be approaching a breakup point.

Bio Techne

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Techne are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Bio Techne sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TechnipFMC Plc and Bio Techne

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

The idea behind TechnipFMC plc and Bio Techne 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.