Correlation Between Dow Jones and Eni SpA
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Eni SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Eni SpA, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Eni SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Eni SpA.
Diversification Opportunities for Dow Jones and Eni SpA
Good diversification
The 3 months correlation between Dow and Eni is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Eni SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eni SpA and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Eni SpA go up and down completely randomly.
Pair Corralation between Dow Jones and Eni SpA
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.63 times more return on investment than Eni SpA. However, Dow Jones Industrial is 1.6 times less risky than Eni SpA. It trades about 0.12 of its potential returns per unit of risk. Eni SpA is currently generating about -0.01 per unit of risk. If you would invest 3,640,493 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 837,707 from holding Dow Jones Industrial or generate 23.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.4% |
| Values | Daily Returns |
Dow Jones Industrial vs. Eni SpA
Performance |
| Timeline |
Dow Jones and Eni SpA Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Eni SpA
Pair trading matchups for Eni SpA
Pair Trading with Dow Jones and Eni SpA
The main advantage of trading using opposite Dow Jones and Eni SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
| Eni SpA vs. GameStop Corp | Eni SpA vs. FRACTAL GAMING GROUP | Eni SpA vs. Ribbon Communications | Eni SpA vs. GigaMedia |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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