Correlation Between Tenaris SA and National Energy
Can any of the company-specific risk be diversified away by investing in both Tenaris SA and National 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 Tenaris SA and National Energy 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 National Energy Services, you can compare the effects of market volatilities on Tenaris SA and National 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 Tenaris SA with a short position of National Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and National Energy.
Diversification Opportunities for Tenaris SA and National Energy
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tenaris and National is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and National Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Energy Services 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 National Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Energy Services has no effect on the direction of Tenaris SA i.e., Tenaris SA and National Energy go up and down completely randomly.
Pair Corralation between Tenaris SA and National Energy
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 0.88 times more return on investment than National Energy. However, Tenaris SA ADR is 1.13 times less risky than National Energy. It trades about 0.4 of its potential returns per unit of risk. National Energy Services is currently generating about -0.2 per unit of risk. If you would invest 3,183 in Tenaris SA ADR on August 28, 2024 and sell it today you would earn a total of 584.00 from holding Tenaris SA ADR or generate 18.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenaris SA ADR vs. National Energy Services
Performance |
| Timeline |
| Tenaris SA ADR |
| National Energy Services |
Tenaris SA and National Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and National Energy
The main advantage of trading using opposite Tenaris SA and National Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, National 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 National Energy will offset losses from the drop in National Energy's long position.| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
| National Energy vs. Dawson Geophysical | National Energy vs. Mccoy Global | National Energy vs. Ranger Energy Services | National Energy vs. MRC Global |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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