Correlation Between Leonardo Spa and Transocean
Can any of the company-specific risk be diversified away by investing in both Leonardo Spa and Transocean 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 Leonardo Spa and Transocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leonardo Spa and Transocean, you can compare the effects of market volatilities on Leonardo Spa and Transocean 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 Leonardo Spa with a short position of Transocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leonardo Spa and Transocean.
Diversification Opportunities for Leonardo Spa and Transocean
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Leonardo and Transocean is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Leonardo Spa and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean and Leonardo Spa 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 Leonardo Spa are associated (or correlated) with Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Leonardo Spa i.e., Leonardo Spa and Transocean go up and down completely randomly.
Pair Corralation between Leonardo Spa and Transocean
Assuming the 90 days horizon Leonardo Spa is expected to generate 1.38 times more return on investment than Transocean. However, Leonardo Spa is 1.38 times more volatile than Transocean. It trades about 0.17 of its potential returns per unit of risk. Transocean is currently generating about -0.01 per unit of risk. If you would invest 2,395 in Leonardo Spa on September 4, 2024 and sell it today you would earn a total of 306.00 from holding Leonardo Spa or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leonardo Spa vs. Transocean
Performance |
| Timeline |
| Leonardo Spa |
| Transocean |
Leonardo Spa and Transocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leonardo Spa and Transocean
The main advantage of trading using opposite Leonardo Spa and Transocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leonardo Spa position performs unexpectedly, Transocean 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 Transocean will offset losses from the drop in Transocean's long position.| Leonardo Spa vs. AKITA Drilling | Leonardo Spa vs. Artisan Partners Asset | Leonardo Spa vs. Uranium Energy Corp | Leonardo Spa vs. Transocean |
| Transocean vs. Precision Drilling | Transocean vs. Sable Offshore Corp | Transocean vs. Patterson UTI Energy | Transocean vs. Seadrill Limited |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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