Correlation Between Snam SpA and Naturgy Energy
Can any of the company-specific risk be diversified away by investing in both Snam SpA and Naturgy Energy 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 Snam SpA and Naturgy Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snam SpA and Naturgy Energy Group, you can compare the effects of market volatilities on Snam SpA and Naturgy Energy 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 Snam SpA with a short position of Naturgy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snam SpA and Naturgy Energy.
Diversification Opportunities for Snam SpA and Naturgy Energy
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Snam and Naturgy is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Snam SpA and Naturgy Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturgy Energy Group and Snam 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 Snam SpA are associated (or correlated) with Naturgy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturgy Energy Group has no effect on the direction of Snam SpA i.e., Snam SpA and Naturgy Energy go up and down completely randomly.
Pair Corralation between Snam SpA and Naturgy Energy
Assuming the 90 days horizon Snam SpA is expected to generate 0.62 times more return on investment than Naturgy Energy. However, Snam SpA is 1.6 times less risky than Naturgy Energy. It trades about 0.0 of its potential returns per unit of risk. Naturgy Energy Group is currently generating about -0.01 per unit of risk. If you would invest 440.00 in Snam SpA on September 14, 2024 and sell it today you would lose (5.00) from holding Snam SpA or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snam SpA vs. Naturgy Energy Group
Performance |
| Timeline |
| Snam SpA |
| Naturgy Energy Group |
Snam SpA and Naturgy Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snam SpA and Naturgy Energy
The main advantage of trading using opposite Snam SpA and Naturgy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snam SpA position performs unexpectedly, Naturgy Energy 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 Energy will offset losses from the drop in Naturgy Energy's long position.| Snam SpA vs. Naturgy Energy Group | Snam SpA vs. CenterPoint Energy | Snam SpA vs. ENN Energy Holdings | Snam SpA vs. ENN Energy Holdings |
| Naturgy Energy vs. CenterPoint Energy | Naturgy Energy vs. Snam SpA | Naturgy Energy vs. ENN Energy Holdings | Naturgy Energy vs. ENN Energy Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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