Correlation Between Energy Transfer and Leonardo SpA
Can any of the company-specific risk be diversified away by investing in both Energy Transfer and Leonardo 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 Energy Transfer and Leonardo SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Transfer LP and Leonardo SpA ADR, you can compare the effects of market volatilities on Energy Transfer and Leonardo 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 Energy Transfer with a short position of Leonardo SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and Leonardo SpA.
Diversification Opportunities for Energy Transfer and Leonardo SpA
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energy and Leonardo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and Leonardo SpA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leonardo SpA ADR and Energy Transfer 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 Energy Transfer LP are associated (or correlated) with Leonardo SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leonardo SpA ADR has no effect on the direction of Energy Transfer i.e., Energy Transfer and Leonardo SpA go up and down completely randomly.
Pair Corralation between Energy Transfer and Leonardo SpA
Allowing for the 90-day total investment horizon Energy Transfer LP is expected to generate 0.62 times more return on investment than Leonardo SpA. However, Energy Transfer LP is 1.61 times less risky than Leonardo SpA. It trades about 0.69 of its potential returns per unit of risk. Leonardo SpA ADR is currently generating about 0.22 per unit of risk. If you would invest 1,616 in Energy Transfer LP on August 31, 2024 and sell it today you would earn a total of 326.00 from holding Energy Transfer LP or generate 20.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Transfer LP vs. Leonardo SpA ADR
Performance |
| Timeline |
| Energy Transfer LP |
| Leonardo SpA ADR |
Energy Transfer and Leonardo SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Transfer and Leonardo SpA
The main advantage of trading using opposite Energy Transfer and Leonardo SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Transfer position performs unexpectedly, Leonardo 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 Leonardo SpA will offset losses from the drop in Leonardo SpA's long position.| Energy Transfer vs. Atlantica Sustainable Infrastructure | Energy Transfer vs. Clearway Energy | Energy Transfer vs. Brookfield Renewable Corp | Energy Transfer vs. Nextera Energy Partners |
| Leonardo SpA vs. Leonardo Spa | Leonardo SpA vs. Thales SA ADR | Leonardo SpA vs. Safran SA | Leonardo SpA vs. Rheinmetall AG ADR |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |