Correlation Between Longvie SA and Naturgy BAN
Can any of the company-specific risk be diversified away by investing in both Longvie SA 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 Longvie SA and Naturgy BAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longvie SA and Naturgy BAN SA, you can compare the effects of market volatilities on Longvie SA 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 Longvie SA with a short position of Naturgy BAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longvie SA and Naturgy BAN.
Diversification Opportunities for Longvie SA and Naturgy BAN
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Longvie and Naturgy is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Longvie 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 Longvie SA 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 Longvie 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 Longvie SA i.e., Longvie SA and Naturgy BAN go up and down completely randomly.
Pair Corralation between Longvie SA and Naturgy BAN
Assuming the 90 days trading horizon Longvie SA is expected to generate 2.77 times less return on investment than Naturgy BAN. In addition to that, Longvie SA is 1.25 times more volatile than Naturgy BAN SA. It trades about 0.03 of its total potential returns per unit of risk. Naturgy BAN SA is currently generating about 0.11 per unit of volatility. If you would invest 88,950 in Naturgy BAN SA on September 14, 2024 and sell it today you would earn a total of 130,050 from holding Naturgy BAN SA or generate 146.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Longvie SA vs. Naturgy BAN SA
Performance |
| Timeline |
| Longvie SA |
| Naturgy BAN SA |
Longvie SA and Naturgy BAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longvie SA and Naturgy BAN
The main advantage of trading using opposite Longvie SA and Naturgy BAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longvie SA 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.| Longvie SA vs. Fiplasto SA | Longvie SA vs. Edesa Holding SA | Longvie SA vs. Vista Energy, SAB | Longvie SA vs. American Express Co |
| Naturgy BAN vs. Harmony Gold Mining | Naturgy BAN vs. Telecom Argentina | Naturgy BAN vs. Agrometal SAI | 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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