Correlation Between Core Laboratories and Tenaris SA
Can any of the company-specific risk be diversified away by investing in both Core Laboratories and Tenaris SA 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 Core Laboratories and Tenaris SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Laboratories NV and Tenaris SA ADR, you can compare the effects of market volatilities on Core Laboratories and Tenaris SA 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 Core Laboratories with a short position of Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Laboratories and Tenaris SA.
Diversification Opportunities for Core Laboratories and Tenaris SA
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Core and Tenaris is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Core Laboratories NV and Tenaris SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA ADR and Core Laboratories 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 Core Laboratories NV are associated (or correlated) with Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA ADR has no effect on the direction of Core Laboratories i.e., Core Laboratories and Tenaris SA go up and down completely randomly.
Pair Corralation between Core Laboratories and Tenaris SA
Considering the 90-day investment horizon Core Laboratories is expected to generate 1.03 times less return on investment than Tenaris SA. In addition to that, Core Laboratories is 1.56 times more volatile than Tenaris SA ADR. It trades about 0.02 of its total potential returns per unit of risk. Tenaris SA ADR is currently generating about 0.03 per unit of volatility. If you would invest 3,025 in Tenaris SA ADR on August 27, 2024 and sell it today you would earn a total of 717.00 from holding Tenaris SA ADR or generate 23.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Laboratories NV vs. Tenaris SA ADR
Performance |
| Timeline |
| Core Laboratories |
| Tenaris SA ADR |
Core Laboratories and Tenaris SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Laboratories and Tenaris SA
The main advantage of trading using opposite Core Laboratories and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Laboratories position performs unexpectedly, Tenaris SA 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 Tenaris SA will offset losses from the drop in Tenaris SA's long position.| Core Laboratories vs. Bristow Group | Core Laboratories vs. RPC Inc | Core Laboratories vs. NOV Inc | Core Laboratories vs. Oceaneering International |
| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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