Correlation Between TechnipFMC Plc and VF

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

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

Diversification Opportunities for TechnipFMC Plc and VF

0.36

Correlation Coefficient

TechnipFMC Plc  VF

Weak diversification

The 3 months correlation between TechnipFMC and VF is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC plc and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation 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 VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of TechnipFMC Plc i.e., TechnipFMC Plc and VF go up and down completely randomly.

Pair Corralation between TechnipFMC Plc and VF

Assuming the 90 days trading horizon TechnipFMC plc is expected to generate 0.41 times more return on investment than VF. However, TechnipFMC plc is 2.47 times less risky than VF. It trades about -0.08 of its potential returns per unit of risk. VF Corporation is currently generating about -0.13 per unit of risk. If you would invest  18,355  in TechnipFMC plc on December 24, 2024 and sell it today you would lose (1,555) from holding TechnipFMC plc or give up 8.47% of portfolio value over 90 days.

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

TechnipFMC plc  vs.  VF Corp.

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 weak 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.

VF Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days VF Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TechnipFMC Plc and VF

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

The idea behind TechnipFMC plc and VF Corporation 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.

Check out your portfolio center.

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.