Correlation Between Tenaris SA and Kontoor Brands
Can any of the company-specific risk be diversified away by investing in both Tenaris SA and Kontoor Brands 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 Kontoor Brands 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 Kontoor Brands, you can compare the effects of market volatilities on Tenaris SA and Kontoor Brands 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 Kontoor Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Kontoor Brands.
Diversification Opportunities for Tenaris SA and Kontoor Brands
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tenaris and Kontoor is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands 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 Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of Tenaris SA i.e., Tenaris SA and Kontoor Brands go up and down completely randomly.
Pair Corralation between Tenaris SA and Kontoor Brands
Allowing for the 90-day total investment horizon Tenaris SA is expected to generate 3.34 times less return on investment than Kontoor Brands. But when comparing it to its historical volatility, Tenaris SA ADR is 1.27 times less risky than Kontoor Brands. It trades about 0.03 of its potential returns per unit of risk. Kontoor Brands is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,000 in Kontoor Brands on September 3, 2024 and sell it today you would earn a total of 5,178 from holding Kontoor Brands or generate 129.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenaris SA ADR vs. Kontoor Brands
Performance |
| Timeline |
| Tenaris SA ADR |
| Kontoor Brands |
Tenaris SA and Kontoor Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and Kontoor Brands
The main advantage of trading using opposite Tenaris SA and Kontoor Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, Kontoor Brands 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 Kontoor Brands will offset losses from the drop in Kontoor Brands' long position.| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
| Kontoor Brands vs. Vince Holding Corp | Kontoor Brands vs. Ermenegildo Zegna NV | Kontoor Brands vs. Columbia Sportswear | Kontoor Brands vs. Gildan Activewear |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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