Correlation Between Naturgy Energy and Snam SpA
Can any of the company-specific risk be diversified away by investing in both Naturgy 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 Naturgy 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 Naturgy Energy Group and Snam SpA ADR, you can compare the effects of market volatilities on Naturgy 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 Naturgy Energy with a short position of Snam SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturgy Energy and Snam SpA.
Diversification Opportunities for Naturgy Energy and Snam SpA
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Naturgy and Snam is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Naturgy Energy Group 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 Naturgy 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 Naturgy Energy Group 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 Naturgy Energy i.e., Naturgy Energy and Snam SpA go up and down completely randomly.
Pair Corralation between Naturgy Energy and Snam SpA
Assuming the 90 days horizon Naturgy Energy Group is expected to generate 1.08 times more return on investment than Snam SpA. However, Naturgy Energy is 1.08 times more volatile than Snam SpA ADR. It trades about 0.18 of its potential returns per unit of risk. Snam SpA ADR is currently generating about 0.06 per unit of risk. If you would invest 505.00 in Naturgy Energy Group on December 7, 2024 and sell it today you would earn a total of 28.00 from holding Naturgy Energy Group or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naturgy Energy Group vs. Snam SpA ADR
Performance |
| Timeline |
| Naturgy Energy Group |
| Snam SpA ADR |
Naturgy Energy and Snam SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naturgy Energy and Snam SpA
The main advantage of trading using opposite Naturgy Energy and Snam SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naturgy 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.| Naturgy Energy vs. Hong Kong and | Naturgy Energy vs. NewJersey Resources | Naturgy Energy vs. Atmos Energy | Naturgy Energy vs. Brookfield Infrastructure Corp |
| 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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