Correlation Between Eni SPA and GulfSlope Energy
Can any of the company-specific risk be diversified away by investing in both Eni SPA and GulfSlope 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 GulfSlope 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 GulfSlope Energy, you can compare the effects of market volatilities on Eni SPA and GulfSlope 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 GulfSlope Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and GulfSlope Energy.
Diversification Opportunities for Eni SPA and GulfSlope Energy
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eni and GulfSlope is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and GulfSlope Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GulfSlope 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 GulfSlope Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GulfSlope Energy has no effect on the direction of Eni SPA i.e., Eni SPA and GulfSlope Energy go up and down completely randomly.
Pair Corralation between Eni SPA and GulfSlope Energy
Taking into account the 90-day investment horizon Eni SPA is expected to generate 61.07 times less return on investment than GulfSlope Energy. But when comparing it to its historical volatility, Eni SpA ADR is 36.77 times less risky than GulfSlope Energy. It trades about 0.03 of its potential returns per unit of risk. GulfSlope Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.50 in GulfSlope Energy on August 27, 2024 and sell it today you would lose (0.49) from holding GulfSlope Energy or give up 98.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. GulfSlope Energy
Performance |
| Timeline |
| Eni SpA ADR |
| GulfSlope Energy |
Eni SPA and GulfSlope Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and GulfSlope Energy
The main advantage of trading using opposite Eni SPA and GulfSlope Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, GulfSlope 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 GulfSlope Energy will offset losses from the drop in GulfSlope 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 |
| GulfSlope Energy vs. Petroleo Brasileiro Petrobras | GulfSlope Energy vs. Equinor ASA ADR | GulfSlope Energy vs. Eni SpA ADR | GulfSlope Energy vs. YPF Sociedad Anonima |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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