Correlation Between NYSE Composite and Tenaris SA
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Tenaris SA 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 NYSE Composite and Tenaris SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Tenaris SA, you can compare the effects of market volatilities on NYSE Composite and Tenaris SA 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 NYSE Composite with a short position of Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Tenaris SA.
Diversification Opportunities for NYSE Composite and Tenaris SA
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Tenaris is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Tenaris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA and NYSE Composite 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 NYSE Composite are associated (or correlated) with Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA has no effect on the direction of NYSE Composite i.e., NYSE Composite and Tenaris SA go up and down completely randomly.
Pair Corralation between NYSE Composite and Tenaris SA
Assuming the 90 days trading horizon NYSE Composite is expected to generate 5.4 times less return on investment than Tenaris SA. But when comparing it to its historical volatility, NYSE Composite is 4.22 times less risky than Tenaris SA. It trades about 0.26 of its potential returns per unit of risk. Tenaris SA is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,577 in Tenaris SA on August 30, 2024 and sell it today you would earn a total of 299.00 from holding Tenaris SA or generate 18.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 86.96% |
| Values | Daily Returns |
NYSE Composite vs. Tenaris SA
Performance |
| Timeline |
NYSE Composite and Tenaris SA Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Tenaris SA
Pair trading matchups for Tenaris SA
Pair Trading with NYSE Composite and Tenaris SA
The main advantage of trading using opposite NYSE Composite and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Tenaris SA 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 Tenaris SA will offset losses from the drop in Tenaris SA's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Tenaris SA vs. Expro Group Holdings | Tenaris SA vs. ChampionX | Tenaris SA vs. Ranger Energy Services | Tenaris SA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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