Correlation Between Cars and Snam SpA
Can any of the company-specific risk be diversified away by investing in both Cars and Snam SpA 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 Cars and Snam SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Snam SpA, you can compare the effects of market volatilities on Cars and Snam SpA 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 Cars with a short position of Snam SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Snam SpA.
Diversification Opportunities for Cars and Snam SpA
Very good diversification
The 3 months correlation between Cars and Snam is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Snam SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snam SpA and Cars 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 Cars Inc are associated (or correlated) with Snam SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snam SpA has no effect on the direction of Cars i.e., Cars and Snam SpA go up and down completely randomly.
Pair Corralation between Cars and Snam SpA
Given the investment horizon of 90 days Cars Inc is expected to generate 0.66 times more return on investment than Snam SpA. However, Cars Inc is 1.51 times less risky than Snam SpA. It trades about 0.04 of its potential returns per unit of risk. Snam SpA is currently generating about 0.01 per unit of risk. If you would invest 1,389 in Cars Inc on September 3, 2024 and sell it today you would earn a total of 598.00 from holding Cars Inc or generate 43.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.64% |
| Values | Daily Returns |
Cars Inc vs. Snam SpA
Performance |
| Timeline |
| Cars Inc |
| Snam SpA |
Cars and Snam SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Snam SpA
The main advantage of trading using opposite Cars and Snam SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, Snam SpA 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 Snam SpA will offset losses from the drop in Snam SpA's long position.The idea behind Cars Inc and Snam SpA 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.| Snam SpA vs. TechnipFMC PLC | Snam SpA vs. Deckers Outdoor | Snam SpA vs. Jackson Financial | Snam SpA vs. OppFi 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 the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| CEOs Directory Screen CEOs from public companies around the world |