Correlation Between Eni SPA and Brighthouse Financial
Can any of the company-specific risk be diversified away by investing in both Eni SPA and Brighthouse Financial 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 Brighthouse Financial 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 Brighthouse Financial, you can compare the effects of market volatilities on Eni SPA and Brighthouse Financial 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 Brighthouse Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Brighthouse Financial.
Diversification Opportunities for Eni SPA and Brighthouse Financial
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eni and Brighthouse is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial 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 Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of Eni SPA i.e., Eni SPA and Brighthouse Financial go up and down completely randomly.
Pair Corralation between Eni SPA and Brighthouse Financial
Taking into account the 90-day investment horizon Eni SpA ADR is expected to under-perform the Brighthouse Financial. In addition to that, Eni SPA is 1.52 times more volatile than Brighthouse Financial. It trades about -0.13 of its total potential returns per unit of risk. Brighthouse Financial is currently generating about -0.04 per unit of volatility. If you would invest 2,492 in Brighthouse Financial on August 27, 2024 and sell it today you would lose (17.00) from holding Brighthouse Financial or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. Brighthouse Financial
Performance |
| Timeline |
| Eni SpA ADR |
| Brighthouse Financial |
Eni SPA and Brighthouse Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and Brighthouse Financial
The main advantage of trading using opposite Eni SPA and Brighthouse Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, Brighthouse Financial 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 Brighthouse Financial will offset losses from the drop in Brighthouse Financial'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 |
| Brighthouse Financial vs. American Financial Group | Brighthouse Financial vs. CMS Energy Corp | Brighthouse Financial vs. Reinsurance Group of |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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