Correlation Between Cablevision Holding and Naturgy BAN
Can any of the company-specific risk be diversified away by investing in both Cablevision Holding and Naturgy BAN 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 Cablevision Holding and Naturgy BAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cablevision Holding SA and Naturgy BAN SA, you can compare the effects of market volatilities on Cablevision Holding and Naturgy BAN 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 Cablevision Holding with a short position of Naturgy BAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cablevision Holding and Naturgy BAN.
Diversification Opportunities for Cablevision Holding and Naturgy BAN
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cablevision and Naturgy is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cablevision Holding SA and Naturgy BAN SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturgy BAN SA and Cablevision Holding 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 Cablevision Holding SA are associated (or correlated) with Naturgy BAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturgy BAN SA has no effect on the direction of Cablevision Holding i.e., Cablevision Holding and Naturgy BAN go up and down completely randomly.
Pair Corralation between Cablevision Holding and Naturgy BAN
Assuming the 90 days trading horizon Cablevision Holding SA is expected to generate 0.53 times more return on investment than Naturgy BAN. However, Cablevision Holding SA is 1.9 times less risky than Naturgy BAN. It trades about 0.05 of its potential returns per unit of risk. Naturgy BAN SA is currently generating about 0.02 per unit of risk. If you would invest 734,000 in Cablevision Holding SA on November 3, 2024 and sell it today you would earn a total of 18,000 from holding Cablevision Holding SA or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cablevision Holding SA vs. Naturgy BAN SA
Performance |
| Timeline |
| Cablevision Holding |
| Naturgy BAN SA |
Cablevision Holding and Naturgy BAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cablevision Holding and Naturgy BAN
The main advantage of trading using opposite Cablevision Holding and Naturgy BAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cablevision Holding position performs unexpectedly, Naturgy BAN 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 Naturgy BAN will offset losses from the drop in Naturgy BAN's long position.| Cablevision Holding vs. Harmony Gold Mining | Cablevision Holding vs. Agrometal SAI | Cablevision Holding vs. Compania de Transporte | Cablevision Holding vs. United States Steel |
| Naturgy BAN vs. Agrometal SAI | Naturgy BAN vs. Harmony Gold Mining | Naturgy BAN vs. Compania de Transporte |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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