Correlation Between EBRO FOODS and Eni SpA
Can any of the company-specific risk be diversified away by investing in both EBRO FOODS and Eni 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 EBRO FOODS and Eni SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBRO FOODS and Eni SpA, you can compare the effects of market volatilities on EBRO FOODS and Eni 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 EBRO FOODS with a short position of Eni SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBRO FOODS and Eni SpA.
Diversification Opportunities for EBRO FOODS and Eni SpA
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EBRO and Eni is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding EBRO FOODS and Eni SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eni SpA and EBRO FOODS 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 EBRO FOODS are associated (or correlated) with Eni SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eni SpA has no effect on the direction of EBRO FOODS i.e., EBRO FOODS and Eni SpA go up and down completely randomly.
Pair Corralation between EBRO FOODS and Eni SpA
Assuming the 90 days trading horizon EBRO FOODS is expected to generate 3.65 times less return on investment than Eni SpA. But when comparing it to its historical volatility, EBRO FOODS is 1.46 times less risky than Eni SpA. It trades about 0.0 of its potential returns per unit of risk. Eni SpA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,335 in Eni SpA on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Eni SpA or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EBRO FOODS vs. Eni SpA
Performance |
| Timeline |
| EBRO FOODS |
| Eni SpA |
EBRO FOODS and Eni SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBRO FOODS and Eni SpA
The main advantage of trading using opposite EBRO FOODS and Eni SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBRO FOODS position performs unexpectedly, Eni 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 Eni SpA will offset losses from the drop in Eni SpA's long position.The idea behind EBRO FOODS and Eni 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.| Eni SpA vs. Zijin Mining Group | Eni SpA vs. GRIFFIN MINING LTD | Eni SpA vs. Microchip Technology Incorporated | Eni SpA vs. Amkor Technology |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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