Correlation Between Natural Gas and Saipem SpA
Can any of the company-specific risk be diversified away by investing in both Natural Gas and Saipem 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 Natural Gas and Saipem SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Gas Services and Saipem SpA, you can compare the effects of market volatilities on Natural Gas and Saipem 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 Natural Gas with a short position of Saipem SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Gas and Saipem SpA.
Diversification Opportunities for Natural Gas and Saipem SpA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Natural and Saipem is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Natural Gas Services and Saipem SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saipem SpA and Natural Gas 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 Natural Gas Services are associated (or correlated) with Saipem SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saipem SpA has no effect on the direction of Natural Gas i.e., Natural Gas and Saipem SpA go up and down completely randomly.
Pair Corralation between Natural Gas and Saipem SpA
Considering the 90-day investment horizon Natural Gas Services is expected to generate 1.49 times more return on investment than Saipem SpA. However, Natural Gas is 1.49 times more volatile than Saipem SpA. It trades about 0.47 of its potential returns per unit of risk. Saipem SpA is currently generating about 0.3 per unit of risk. If you would invest 1,997 in Natural Gas Services on August 31, 2024 and sell it today you would earn a total of 756.00 from holding Natural Gas Services or generate 37.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Gas Services vs. Saipem SpA
Performance |
| Timeline |
| Natural Gas Services |
| Saipem SpA |
Natural Gas and Saipem SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Gas and Saipem SpA
The main advantage of trading using opposite Natural Gas and Saipem SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Gas position performs unexpectedly, Saipem 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 Saipem SpA will offset losses from the drop in Saipem SpA's long position.| Natural Gas vs. Enerflex | Natural Gas vs. Forum Energy Technologies | Natural Gas vs. Archrock | Natural Gas vs. Geospace Technologies |
| Saipem SpA vs. Expro Group Holdings | Saipem SpA vs. ChampionX | Saipem SpA vs. Ranger Energy Services | Saipem SpA vs. Cactus Inc |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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