Correlation Between Tenaris SA and Weatherford International
Can any of the company-specific risk be diversified away by investing in both Tenaris SA and Weatherford International 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 Weatherford International 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 Weatherford International PLC, you can compare the effects of market volatilities on Tenaris SA and Weatherford International 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 Weatherford International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Weatherford International.
Diversification Opportunities for Tenaris SA and Weatherford International
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tenaris and Weatherford is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Weatherford International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weatherford International 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 Weatherford International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weatherford International has no effect on the direction of Tenaris SA i.e., Tenaris SA and Weatherford International go up and down completely randomly.
Pair Corralation between Tenaris SA and Weatherford International
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 0.66 times more return on investment than Weatherford International. However, Tenaris SA ADR is 1.52 times less risky than Weatherford International. It trades about 0.38 of its potential returns per unit of risk. Weatherford International PLC is currently generating about 0.09 per unit of risk. If you would invest 3,121 in Tenaris SA ADR on August 24, 2024 and sell it today you would earn a total of 580.00 from holding Tenaris SA ADR or generate 18.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tenaris SA ADR vs. Weatherford International PLC
Performance |
| Timeline |
| Tenaris SA ADR |
| Weatherford International |
Tenaris SA and Weatherford International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and Weatherford International
The main advantage of trading using opposite Tenaris SA and Weatherford International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, Weatherford International 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 Weatherford International will offset losses from the drop in Weatherford International's long position.| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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