Correlation Between Saipem SpA and Parkland
Can any of the company-specific risk be diversified away by investing in both Saipem SpA and Parkland 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 Saipem SpA and Parkland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saipem SpA and Parkland, you can compare the effects of market volatilities on Saipem SpA and Parkland 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 Saipem SpA with a short position of Parkland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saipem SpA and Parkland.
Diversification Opportunities for Saipem SpA and Parkland
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Saipem and Parkland is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Saipem SpA and Parkland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkland and Saipem SpA 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 Saipem SpA are associated (or correlated) with Parkland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkland has no effect on the direction of Saipem SpA i.e., Saipem SpA and Parkland go up and down completely randomly.
Pair Corralation between Saipem SpA and Parkland
Assuming the 90 days horizon Saipem SpA is expected to generate 0.33 times more return on investment than Parkland. However, Saipem SpA is 3.02 times less risky than Parkland. It trades about 0.22 of its potential returns per unit of risk. Parkland is currently generating about -0.12 per unit of risk. If you would invest 245.00 in Saipem SpA on September 24, 2024 and sell it today you would earn a total of 11.00 from holding Saipem SpA or generate 4.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Saipem SpA vs. Parkland
Performance |
Timeline |
Saipem SpA |
Parkland |
Saipem SpA and Parkland Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Saipem SpA and Parkland
The main advantage of trading using opposite Saipem SpA and Parkland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saipem SpA position performs unexpectedly, Parkland 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 Parkland will offset losses from the drop in Parkland's long position.Saipem SpA vs. SMG Industries | Saipem SpA vs. NXT Energy Solutions | Saipem SpA vs. Dawson Geophysical | Saipem SpA vs. Calfrac Well Services |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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