Correlation Between Chevron and Eni SpA
Can any of the company-specific risk be diversified away by investing in both Chevron 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 Chevron and Eni SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron and Eni SpA, you can compare the effects of market volatilities on Chevron 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 Chevron with a short position of Eni SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron and Eni SpA.
Diversification Opportunities for Chevron and Eni SpA
Very good diversification
The 3 months correlation between Chevron and Eni is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Chevron and Eni SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eni SpA and Chevron 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 Chevron 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 Chevron i.e., Chevron and Eni SpA go up and down completely randomly.
Pair Corralation between Chevron and Eni SpA
Assuming the 90 days horizon Chevron is expected to generate 1.23 times more return on investment than Eni SpA. However, Chevron is 1.23 times more volatile than Eni SpA. It trades about -0.01 of its potential returns per unit of risk. Eni SpA is currently generating about -0.03 per unit of risk. If you would invest 14,333 in Chevron on September 19, 2024 and sell it today you would lose (333.00) from holding Chevron or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron vs. Eni SpA
Performance |
| Timeline |
| Chevron |
| Eni SpA |
Chevron and Eni SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron and Eni SpA
The main advantage of trading using opposite Chevron and Eni SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron 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.| Chevron vs. Grupo Carso SAB | Chevron vs. Digilife Technologies Limited | Chevron vs. Playtech plc | Chevron vs. ACCSYS TECHPLC EO |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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