Correlation Between Papa Johns and Snam SpA

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

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

Diversification Opportunities for Papa Johns and Snam SpA

0.45

Correlation Coefficient

Papa Johns  Snam SpA

Very weak diversification

The 3 months correlation between Papa and Snam is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Papa Johns International and Snam SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snam SpA and Papa Johns 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 Papa Johns International are associated (or correlated) with Snam SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snam SpA has no effect on the direction of Papa Johns i.e., Papa Johns and Snam SpA go up and down completely randomly.

Pair Corralation between Papa Johns and Snam SpA

Assuming the 90 days horizon Papa Johns is expected to generate 110.89 times less return on investment than Snam SpA. In addition to that, Papa Johns is 3.26 times more volatile than Snam SpA. It trades about 0.0 of its total potential returns per unit of risk. Snam SpA is currently generating about 0.16 per unit of volatility. If you would invest  412.00  in Snam SpA on December 27, 2024 and sell it today you would earn a total of  53.00  from holding Snam SpA or generate 12.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Papa Johns International  vs.  Snam SpA

Papa Johns International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Papa Johns International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Papa Johns is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Snam SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Snam SpA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Snam SpA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Papa Johns and Snam SpA

The main advantage of trading using opposite Papa Johns and Snam SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Papa Johns position performs unexpectedly, Snam SpA 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 SpA will offset losses from the drop in Snam SpA's long position.

The idea behind Papa Johns International and Snam SpA 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.