Correlation Between Snam Rete and Gas Natural

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

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

Diversification Opportunities for Snam Rete and Gas Natural

0.54
  Correlation Coefficient
Snam Rete Gas
Gas Natural Sdg

Very weak diversification

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

Pair Corralation between Snam Rete and Gas Natural

Assuming the 90 days horizon Snam Rete is expected to generate 1.07 times less return on investment than Gas Natural. In addition to that, Snam Rete is 1.33 times more volatile than Gas Natural Sdg. It trades about 0.06 of its total potential returns per unit of risk. Gas Natural Sdg is currently generating about 0.08 per unit of volatility. If you would invest  2,256  in Gas Natural Sdg on May 1, 2021 and sell it today you would earn a total of  309.00  from holding Gas Natural Sdg or generate 13.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Snam Rete Gas  vs.  Gas Natural Sdg

 Performance (%) 
      Timeline 
Snam Rete Gas 
 SNMRY Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Snam Rete Gas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Snam Rete may actually be approaching a critical reversion point that can send shares even higher in August 2021.

SNMRY Price Channel

Gas Natural Sdg 
 GASNF Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Gas Natural Sdg are ranked lower than 5 (%) 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 and Gas Natural Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Snam Rete and Gas Natural

The main advantage of trading using opposite Snam Rete and Gas Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snam Rete position performs unexpectedly, Gas Natural 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 Gas Natural will offset losses from the drop in Gas Natural's long position.
The idea behind Snam Rete Gas and Gas Natural Sdg 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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