Correlation Between Tenaris SA and Two Harbors
Can any of the company-specific risk be diversified away by investing in both Tenaris SA and Two Harbors 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 Two Harbors 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 Two Harbors Investments, you can compare the effects of market volatilities on Tenaris SA and Two Harbors 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 Two Harbors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Two Harbors.
Diversification Opportunities for Tenaris SA and Two Harbors
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tenaris and Two is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Two Harbors Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Two Harbors Investments 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 Two Harbors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Two Harbors Investments has no effect on the direction of Tenaris SA i.e., Tenaris SA and Two Harbors go up and down completely randomly.
Pair Corralation between Tenaris SA and Two Harbors
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 1.56 times more return on investment than Two Harbors. However, Tenaris SA is 1.56 times more volatile than Two Harbors Investments. It trades about 0.13 of its potential returns per unit of risk. Two Harbors Investments is currently generating about 0.02 per unit of risk. If you would invest 3,793 in Tenaris SA ADR on October 25, 2024 and sell it today you would earn a total of 75.00 from holding Tenaris SA ADR or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Tenaris SA ADR vs. Two Harbors Investments
Performance |
| Timeline |
| Tenaris SA ADR |
| Two Harbors Investments |
Tenaris SA and Two Harbors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and Two Harbors
The main advantage of trading using opposite Tenaris SA and Two Harbors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, Two Harbors 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 Two Harbors will offset losses from the drop in Two Harbors' long position.| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
| Two Harbors vs. Borr Drilling | Two Harbors vs. Drilling Tools International | Two Harbors vs. Kilroy Realty Corp | Two Harbors vs. Tenaris SA ADR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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