Correlation Between TechnipFMC Plc and Forum Energy

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Can any of the company-specific risk be diversified away by investing in both TechnipFMC Plc and Forum Energy 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 Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC Plc and Forum Energy Technologies, you can compare the effects of market volatilities on TechnipFMC Plc and Forum Energy 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 Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC Plc and Forum Energy.

Diversification Opportunities for TechnipFMC Plc and Forum Energy

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between TechnipFMC and Forum is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC Plc and Forum Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Technologies 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 Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Technologies has no effect on the direction of TechnipFMC Plc i.e., TechnipFMC Plc and Forum Energy go up and down completely randomly.

Pair Corralation between TechnipFMC Plc and Forum Energy

Considering the 90-day investment horizon TechnipFMC Plc is expected to generate 1.66 times more return on investment than Forum Energy. However, TechnipFMC Plc is 1.66 times more volatile than Forum Energy Technologies. It trades about 0.14 of its potential returns per unit of risk. Forum Energy Technologies is currently generating about -0.51 per unit of risk. If you would invest  839.00  in TechnipFMC Plc on July 6, 2022 and sell it today you would earn a total of  70.00  from holding TechnipFMC Plc or generate 8.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

TechnipFMC Plc  vs.  Forum Energy Technologies

 Performance (%) 
       Timeline  
TechnipFMC Plc 
TechnipFMC Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC Plc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, TechnipFMC Plc reported solid returns over the last few months and may actually be approaching a breakup point.

TechnipFMC Price Channel

Forum Energy Technologies 
Forum Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, Forum Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Forum Price Channel

TechnipFMC Plc and Forum Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TechnipFMC Plc and Forum Energy

The main advantage of trading using opposite TechnipFMC Plc and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC Plc position performs unexpectedly, Forum Energy 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 Forum Energy will offset losses from the drop in Forum Energy's long position.
TechnipFMC Plc vs. Amazon Inc
The idea behind TechnipFMC Plc and Forum Energy Technologies 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.
Forum Energy vs. Amazon Inc
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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