Correlation Between Expand Energy and Snam SpA
Can any of the company-specific risk be diversified away by investing in both Expand Energy 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 Expand Energy and Snam SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expand Energy and Snam SpA ADR, you can compare the effects of market volatilities on Expand Energy 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 Expand Energy with a short position of Snam SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expand Energy and Snam SpA.
Diversification Opportunities for Expand Energy and Snam SpA
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Expand and Snam is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Expand Energy and Snam SpA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snam SpA ADR and Expand Energy 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 Expand Energy 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 ADR has no effect on the direction of Expand Energy i.e., Expand Energy and Snam SpA go up and down completely randomly.
Pair Corralation between Expand Energy and Snam SpA
Assuming the 90 days horizon Expand Energy is expected to generate 1.54 times more return on investment than Snam SpA. However, Expand Energy is 1.54 times more volatile than Snam SpA ADR. It trades about 0.12 of its potential returns per unit of risk. Snam SpA ADR is currently generating about 0.1 per unit of risk. If you would invest 9,465 in Expand Energy on October 22, 2024 and sell it today you would earn a total of 667.00 from holding Expand Energy or generate 7.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Expand Energy vs. Snam SpA ADR
Performance |
| Timeline |
| Expand Energy |
| Snam SpA ADR |
Expand Energy and Snam SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expand Energy and Snam SpA
The main advantage of trading using opposite Expand Energy and Snam SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expand Energy 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.| Expand Energy vs. Suburban Propane Partners | Expand Energy vs. Cheniere Energy Partners | Expand Energy vs. United Utilities Group | Expand Energy vs. Biglari Holdings |
| Snam SpA vs. Northwest Natural Gas | Snam SpA vs. NewJersey Resources | Snam SpA vs. Atmos Energy | Snam SpA vs. Suburban Propane Partners |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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