Correlation Between Tenaris SA and First Internet
Can any of the company-specific risk be diversified away by investing in both Tenaris SA and First Internet 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 Tenaris SA and First Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenaris SA ADR and First Internet Bancorp, you can compare the effects of market volatilities on Tenaris SA and First Internet 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 Tenaris SA with a short position of First Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and First Internet.
Diversification Opportunities for Tenaris SA and First Internet
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tenaris and First is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and First Internet Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Internet Bancorp and Tenaris 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 Tenaris SA ADR are associated (or correlated) with First Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Internet Bancorp has no effect on the direction of Tenaris SA i.e., Tenaris SA and First Internet go up and down completely randomly.
Pair Corralation between Tenaris SA and First Internet
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 5.42 times more return on investment than First Internet. However, Tenaris SA is 5.42 times more volatile than First Internet Bancorp. It trades about 0.4 of its potential returns per unit of risk. First Internet Bancorp is currently generating about 0.28 per unit of risk. If you would invest 3,241 in Tenaris SA ADR on September 1, 2024 and sell it today you would earn a total of 592.00 from holding Tenaris SA ADR or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenaris SA ADR vs. First Internet Bancorp
Performance |
| Timeline |
| Tenaris SA ADR |
| First Internet Bancorp |
Tenaris SA and First Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and First Internet
The main advantage of trading using opposite Tenaris SA and First Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, First Internet 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 First Internet will offset losses from the drop in First Internet's long position.| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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