Correlation Between Eni SPA and Alliance Resource
Can any of the company-specific risk be diversified away by investing in both Eni SPA and Alliance Resource 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 Eni SPA and Alliance Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eni SpA ADR and Alliance Resource Partners, you can compare the effects of market volatilities on Eni SPA and Alliance Resource 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 Eni SPA with a short position of Alliance Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Alliance Resource.
Diversification Opportunities for Eni SPA and Alliance Resource
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eni and Alliance is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Alliance Resource Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Resource and Eni SPA 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 Eni SpA ADR are associated (or correlated) with Alliance Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Resource has no effect on the direction of Eni SPA i.e., Eni SPA and Alliance Resource go up and down completely randomly.
Pair Corralation between Eni SPA and Alliance Resource
Taking into account the 90-day investment horizon Eni SpA ADR is expected to under-perform the Alliance Resource. But the stock apears to be less risky and, when comparing its historical volatility, Eni SpA ADR is 1.68 times less risky than Alliance Resource. The stock trades about -0.13 of its potential returns per unit of risk. The Alliance Resource Partners is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 2,485 in Alliance Resource Partners on August 27, 2024 and sell it today you would earn a total of 373.00 from holding Alliance Resource Partners or generate 15.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. Alliance Resource Partners
Performance |
| Timeline |
| Eni SpA ADR |
| Alliance Resource |
Eni SPA and Alliance Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and Alliance Resource
The main advantage of trading using opposite Eni SPA and Alliance Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, Alliance Resource 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 Alliance Resource will offset losses from the drop in Alliance Resource's long position.| Eni SPA vs. TotalEnergies SE ADR | Eni SPA vs. Ecopetrol SA ADR | Eni SPA vs. Shell PLC ADR | Eni SPA vs. Petroleo Brasileiro Petrobras |
| Alliance Resource vs. Peabody Energy Corp | Alliance Resource vs. Natural Resource Partners | Alliance Resource vs. Hallador Energy | Alliance Resource vs. NACCO Industries |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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