Correlation Between TechnipFMC PLC and Prologis

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

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

Diversification Opportunities for TechnipFMC PLC and Prologis

-0.32

Correlation Coefficient

TechnipFMC PLC  Prologis

Very good diversification

The 3 months correlation between TechnipFMC and Prologis is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prologis 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 Prologis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prologis has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Prologis go up and down completely randomly.

Pair Corralation between TechnipFMC PLC and Prologis

Considering the 90-day investment horizon TechnipFMC PLC is expected to generate 1.2 times more return on investment than Prologis. However, TechnipFMC PLC is 1.2 times more volatile than Prologis. It trades about 0.48 of its potential returns per unit of risk. Prologis is currently generating about -0.01 per unit of risk. If you would invest  2,634  in TechnipFMC PLC on September 5, 2024 and sell it today you would earn a total of  518.00  from holding TechnipFMC PLC or generate 19.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

TechnipFMC PLC  vs.  Prologis

TechnipFMC PLC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, TechnipFMC PLC demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Prologis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prologis has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Prologis is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with TechnipFMC PLC and Prologis

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

The idea behind TechnipFMC PLC and Prologis 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.