Correlation Between Shawcor and Tenaris SA
Can any of the company-specific risk be diversified away by investing in both Shawcor and Tenaris SA 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 Shawcor and Tenaris SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shawcor and Tenaris SA ADR, you can compare the effects of market volatilities on Shawcor and Tenaris SA 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 Shawcor with a short position of Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shawcor and Tenaris SA.
Diversification Opportunities for Shawcor and Tenaris SA
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shawcor and Tenaris is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shawcor and Tenaris SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA ADR and Shawcor 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 Shawcor are associated (or correlated) with Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA ADR has no effect on the direction of Shawcor i.e., Shawcor and Tenaris SA go up and down completely randomly.
Pair Corralation between Shawcor and Tenaris SA
Assuming the 90 days horizon Shawcor is expected to generate 0.58 times more return on investment than Tenaris SA. However, Shawcor is 1.72 times less risky than Tenaris SA. It trades about 0.68 of its potential returns per unit of risk. Tenaris SA ADR is currently generating about -0.19 per unit of risk. If you would invest 1,299 in Shawcor on January 19, 2024 and sell it today you would earn a total of 26.00 from holding Shawcor or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 22.73% |
| Values | Daily Returns |
Shawcor vs. Tenaris SA ADR
Performance |
| Timeline |
| Shawcor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Tenaris SA ADR |
Shawcor and Tenaris SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shawcor and Tenaris SA
The main advantage of trading using opposite Shawcor and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shawcor position performs unexpectedly, Tenaris SA 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 Tenaris SA will offset losses from the drop in Tenaris SA's long position.| Shawcor vs. Compania de Minas | Shawcor vs. McEwen Mining | Shawcor vs. Endeavour Silver Corp | Shawcor vs. Hecla Mining |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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