Correlation Between Eni SPA and CGX Energy
Can any of the company-specific risk be diversified away by investing in both Eni SPA and CGX Energy 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 CGX Energy 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 CGX Energy, you can compare the effects of market volatilities on Eni SPA and CGX Energy 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 CGX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and CGX Energy.
Diversification Opportunities for Eni SPA and CGX Energy
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eni and CGX is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy 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 CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of Eni SPA i.e., Eni SPA and CGX Energy go up and down completely randomly.
Pair Corralation between Eni SPA and CGX Energy
Taking into account the 90-day investment horizon Eni SpA ADR is expected to generate 0.23 times more return on investment than CGX Energy. However, Eni SpA ADR is 4.41 times less risky than CGX Energy. It trades about 0.01 of its potential returns per unit of risk. CGX Energy is currently generating about -0.05 per unit of risk. If you would invest 2,742 in Eni SpA ADR on September 3, 2024 and sell it today you would earn a total of 65.00 from holding Eni SpA ADR or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. CGX Energy
Performance |
| Timeline |
| Eni SpA ADR |
| CGX Energy |
Eni SPA and CGX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and CGX Energy
The main advantage of trading using opposite Eni SPA and CGX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, CGX Energy 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 CGX Energy will offset losses from the drop in CGX Energy'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 |
| CGX Energy vs. Seadrill Limited | CGX Energy vs. Noble plc | CGX Energy vs. Borr Drilling | CGX Energy vs. SCOR PK |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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