Correlation Between Tenaris SA and Schlumberger
Can any of the company-specific risk be diversified away by investing in both Tenaris SA and Schlumberger 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 Schlumberger 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 Schlumberger NV, you can compare the effects of market volatilities on Tenaris SA and Schlumberger 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 Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Schlumberger.
Diversification Opportunities for Tenaris SA and Schlumberger
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tenaris and Schlumberger is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Schlumberger NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger NV 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger NV has no effect on the direction of Tenaris SA i.e., Tenaris SA and Schlumberger go up and down completely randomly.
Pair Corralation between Tenaris SA and Schlumberger
Allowing for the 90-day total investment horizon Tenaris SA is expected to generate 1.41 times less return on investment than Schlumberger. In addition to that, Tenaris SA is 1.16 times more volatile than Schlumberger NV. It trades about 0.37 of its total potential returns per unit of risk. Schlumberger NV is currently generating about 0.61 per unit of volatility. If you would invest 4,816 in Schlumberger NV on December 30, 2023 and sell it today you would earn a total of 665.00 from holding Schlumberger NV or generate 13.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Tenaris SA ADR vs. Schlumberger NV
Performance |
Timeline |
Tenaris SA ADR |
Schlumberger NV |
Tenaris SA and Schlumberger Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tenaris SA and Schlumberger
The main advantage of trading using opposite Tenaris SA and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.Tenaris SA vs. Newpark Resources | Tenaris SA vs. Now Inc | Tenaris SA vs. Dawson Geophysical | Tenaris SA vs. Bristow Group |
Schlumberger vs. Newpark Resources | Schlumberger vs. Tenaris SA ADR | Schlumberger vs. Now Inc | Schlumberger vs. Bristow Group |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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