Correlation Between TechnipFMC PLC and Bristow

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

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

Diversification Opportunities for TechnipFMC PLC and Bristow

0.61

Correlation Coefficient

TechnipFMC PLC  Bristow

Poor diversification

The 3 months correlation between TechnipFMC and Bristow is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Bristow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristow Group 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 Bristow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristow Group has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Bristow go up and down completely randomly.

Pair Corralation between TechnipFMC PLC and Bristow

Considering the 90-day investment horizon TechnipFMC PLC is expected to generate 0.93 times more return on investment than Bristow. However, TechnipFMC PLC is 1.08 times less risky than Bristow. It trades about 0.16 of its potential returns per unit of risk. Bristow Group is currently generating about -0.01 per unit of risk. If you would invest  2,545  in TechnipFMC PLC on September 2, 2024 and sell it today you would earn a total of  592.00  from holding TechnipFMC PLC or generate 23.26% return on investment over 90 days.

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

TechnipFMC PLC  vs.  Bristow Group

TechnipFMC PLC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, TechnipFMC PLC demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bristow Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bristow Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bristow is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with TechnipFMC PLC and Bristow

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

The idea behind TechnipFMC PLC and Bristow Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.