Correlation Between Balfour Beatty and TechnipFMC PLC
Can any of the company-specific risk be diversified away by investing in both Balfour Beatty and TechnipFMC PLC 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 Balfour Beatty and TechnipFMC PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balfour Beatty plc and TechnipFMC PLC, you can compare the effects of market volatilities on Balfour Beatty and TechnipFMC PLC 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 Balfour Beatty with a short position of TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balfour Beatty and TechnipFMC PLC.
Diversification Opportunities for Balfour Beatty and TechnipFMC PLC
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Balfour and TechnipFMC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Balfour Beatty plc and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC and Balfour Beatty 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 Balfour Beatty plc are associated (or correlated) with TechnipFMC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC PLC has no effect on the direction of Balfour Beatty i.e., Balfour Beatty and TechnipFMC PLC go up and down completely randomly.
Pair Corralation between Balfour Beatty and TechnipFMC PLC
Assuming the 90 days trading horizon Balfour Beatty plc is expected to generate 0.53 times more return on investment than TechnipFMC PLC. However, Balfour Beatty plc is 1.88 times less risky than TechnipFMC PLC. It trades about 0.06 of its potential returns per unit of risk. TechnipFMC PLC is currently generating about 0.0 per unit of risk. If you would invest 44,820 in Balfour Beatty plc on September 26, 2024 and sell it today you would earn a total of 540.00 from holding Balfour Beatty plc or generate 1.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Balfour Beatty plc vs. TechnipFMC PLC
Performance |
Timeline |
Balfour Beatty plc |
TechnipFMC PLC |
Balfour Beatty and TechnipFMC PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Balfour Beatty and TechnipFMC PLC
The main advantage of trading using opposite Balfour Beatty and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balfour Beatty position performs unexpectedly, TechnipFMC PLC 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 TechnipFMC PLC will offset losses from the drop in TechnipFMC PLC's long position.Balfour Beatty vs. Berkshire Hathaway | Balfour Beatty vs. Hyundai Motor | Balfour Beatty vs. Samsung Electronics Co | Balfour Beatty vs. Samsung Electronics Co |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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