Correlation Between TechnipFMC PLC and Allianz Technology

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

By analyzing existing cross correlation between TechnipFMC PLC and Allianz Technology Trust, you can compare the effects of market volatilities on TechnipFMC PLC and Allianz Technology 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 Allianz Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and Allianz Technology.

Diversification Opportunities for TechnipFMC PLC and Allianz Technology

0.88

Correlation Coefficient

TechnipFMC PLC  Allianz Technology

Very poor diversification

The 3 months correlation between TechnipFMC and Allianz is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Allianz Technology Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz Technology Trust 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 Allianz Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz Technology Trust has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Allianz Technology go up and down completely randomly.

Pair Corralation between TechnipFMC PLC and Allianz Technology

Assuming the 90 days trading horizon TechnipFMC PLC is expected to generate 1.33 times more return on investment than Allianz Technology. However, TechnipFMC PLC is 1.33 times more volatile than Allianz Technology Trust. It trades about 0.19 of its potential returns per unit of risk. Allianz Technology Trust is currently generating about 0.16 per unit of risk. If you would invest  2,320  in TechnipFMC PLC on September 3, 2024 and sell it today you would earn a total of  646.00  from holding TechnipFMC PLC or generate 27.84% return on investment over 90 days.

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

TechnipFMC PLC  vs.  Allianz Technology Trust

TechnipFMC PLC

Risk-Adjusted Performance

15 of 100

Good

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. In spite of comparatively uncertain basic indicators, TechnipFMC PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Allianz Technology Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz Technology Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Allianz Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TechnipFMC PLC and Allianz Technology

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

The idea behind TechnipFMC PLC and Allianz Technology Trust 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.