Correlation Between Saipem SpA and MRC Global
Can any of the company-specific risk be diversified away by investing in both Saipem SpA and MRC Global 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 Saipem SpA and MRC Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saipem SpA and MRC Global, you can compare the effects of market volatilities on Saipem SpA and MRC Global 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 Saipem SpA with a short position of MRC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saipem SpA and MRC Global.
Diversification Opportunities for Saipem SpA and MRC Global
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Saipem and MRC is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Saipem SpA and MRC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Global and Saipem 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 Saipem SpA are associated (or correlated) with MRC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRC Global has no effect on the direction of Saipem SpA i.e., Saipem SpA and MRC Global go up and down completely randomly.
Pair Corralation between Saipem SpA and MRC Global
Assuming the 90 days horizon Saipem SpA is expected to generate 1.52 times less return on investment than MRC Global. But when comparing it to its historical volatility, Saipem SpA is 1.79 times less risky than MRC Global. It trades about 0.23 of its potential returns per unit of risk. MRC Global is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,226 in MRC Global on August 27, 2024 and sell it today you would earn a total of 180.00 from holding MRC Global or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saipem SpA vs. MRC Global
Performance |
| Timeline |
| Saipem SpA |
| MRC Global |
Saipem SpA and MRC Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saipem SpA and MRC Global
The main advantage of trading using opposite Saipem SpA and MRC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saipem SpA position performs unexpectedly, MRC Global 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 MRC Global will offset losses from the drop in MRC Global's long position.| Saipem SpA vs. Expro Group Holdings | Saipem SpA vs. ChampionX | Saipem SpA vs. Ranger Energy Services | Saipem SpA vs. Cactus Inc |
| MRC Global vs. NOV Inc | MRC Global vs. Ranger Energy Services | MRC Global vs. Oil States International | MRC Global vs. Geospace Technologies |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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