Correlation Between Eni SPA and Prospera Energy
Can any of the company-specific risk be diversified away by investing in both Eni SPA and Prospera 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 Prospera 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 Prospera Energy, you can compare the effects of market volatilities on Eni SPA and Prospera 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 Prospera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Prospera Energy.
Diversification Opportunities for Eni SPA and Prospera Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eni and Prospera is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Prospera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospera 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 Prospera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospera Energy has no effect on the direction of Eni SPA i.e., Eni SPA and Prospera Energy go up and down completely randomly.
Pair Corralation between Eni SPA and Prospera Energy
Taking into account the 90-day investment horizon Eni SpA ADR is expected to under-perform the Prospera Energy. But the stock apears to be less risky and, when comparing its historical volatility, Eni SpA ADR is 6.03 times less risky than Prospera Energy. The stock trades about -0.24 of its potential returns per unit of risk. The Prospera Energy is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2.73 in Prospera Energy on August 29, 2024 and sell it today you would lose (0.24) from holding Prospera Energy or give up 8.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. Prospera Energy
Performance |
| Timeline |
| Eni SpA ADR |
| Prospera Energy |
Eni SPA and Prospera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and Prospera Energy
The main advantage of trading using opposite Eni SPA and Prospera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, Prospera 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 Prospera Energy will offset losses from the drop in Prospera 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 |
| Prospera Energy vs. Petroleo Brasileiro Petrobras | Prospera Energy vs. Equinor ASA ADR | Prospera Energy vs. Eni SpA ADR | Prospera 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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