Correlation Between Dairy Farm and Eni SpA
Can any of the company-specific risk be diversified away by investing in both Dairy Farm 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 Dairy Farm and Eni SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Eni SpA, you can compare the effects of market volatilities on Dairy Farm 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 Dairy Farm with a short position of Eni SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Eni SpA.
Diversification Opportunities for Dairy Farm and Eni SpA
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dairy and Eni is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Eni SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eni SpA and Dairy Farm 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 Dairy Farm International 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 Dairy Farm i.e., Dairy Farm and Eni SpA go up and down completely randomly.
Pair Corralation between Dairy Farm and Eni SpA
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 3.55 times more return on investment than Eni SpA. However, Dairy Farm is 3.55 times more volatile than Eni SpA. It trades about 0.16 of its potential returns per unit of risk. Eni SpA is currently generating about 0.01 per unit of risk. If you would invest 151.00 in Dairy Farm International on September 12, 2024 and sell it today you would earn a total of 67.00 from holding Dairy Farm International or generate 44.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Dairy Farm International vs. Eni SpA
Performance |
| Timeline |
| Dairy Farm International |
| Eni SpA |
Dairy Farm and Eni SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Eni SpA
The main advantage of trading using opposite Dairy Farm and Eni SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm 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.| Dairy Farm vs. Motorcar Parts of | Dairy Farm vs. Playtech plc | Dairy Farm vs. ePlay Digital | Dairy Farm vs. PLAYTIKA HOLDING DL 01 |
| Eni SpA vs. PKSHA TECHNOLOGY INC | Eni SpA vs. Vastned Retail NV | Eni SpA vs. FANDIFI TECHNOLOGY P | Eni SpA vs. BJs Wholesale Club |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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