Correlation Between Gas Natural and Snam Rete

By analyzing existing cross correlation between Gas Natural Sdg and Snam Rete Gas, you can compare the effects of market volatilities on Gas Natural and Snam Rete 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 Gas Natural with a short position of Snam Rete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gas Natural and Snam Rete.

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Can any of the company-specific risk be diversified away by investing in both Gas Natural and Snam Rete 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 Gas Natural and Snam Rete into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Gas Natural and Snam Rete

0.54
  Correlation Coefficient
Gas Natural Sdg
Snam Rete Gas

Very weak diversification

The 3 months correlation between GASNF and SNMRY is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gas Natural Sdg and Snam Rete Gas in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Snam Rete Gas and Gas Natural 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 Gas Natural Sdg are associated (or correlated) with Snam Rete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snam Rete Gas has no effect on the direction of Gas Natural i.e., Gas Natural and Snam Rete go up and down completely randomly.

Pair Corralation between Gas Natural and Snam Rete

Assuming the 90 days horizon Gas Natural is expected to generate 1.22 times less return on investment than Snam Rete. In addition to that, Gas Natural is 1.29 times more volatile than Snam Rete Gas. It trades about 0.02 of its total potential returns per unit of risk. Snam Rete Gas is currently generating about 0.03 per unit of volatility. If you would invest  1,016  in Snam Rete Gas on May 1, 2021 and sell it today you would earn a total of  206.00  from holding Snam Rete Gas or generate 20.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.78%
ValuesDaily Returns

Gas Natural Sdg  vs.  Snam Rete Gas

 Performance (%) 
      Timeline 
Gas Natural Sdg 
 GASNF Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Gas Natural Sdg are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Gas Natural is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

GASNF Price Channel

Snam Rete Gas 
 SNMRY Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Snam Rete Gas are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Snam Rete is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SNMRY Price Channel

Gas Natural and Snam Rete Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Gas Natural and Snam Rete

The main advantage of trading using opposite Gas Natural and Snam Rete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gas Natural position performs unexpectedly, Snam Rete 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 Snam Rete will offset losses from the drop in Snam Rete's long position.
The idea behind Gas Natural Sdg and Snam Rete Gas pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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