Correlation Between Eni SPA and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both Eni SPA and InPlay Oil 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 InPlay Oil 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 InPlay Oil Corp, you can compare the effects of market volatilities on Eni SPA and InPlay Oil 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 InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and InPlay Oil.
Diversification Opportunities for Eni SPA and InPlay Oil
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eni and InPlay is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Eni SPA i.e., Eni SPA and InPlay Oil go up and down completely randomly.
Pair Corralation between Eni SPA and InPlay Oil
Taking into account the 90-day investment horizon Eni SpA ADR is expected to generate 0.63 times more return on investment than InPlay Oil. However, Eni SpA ADR is 1.59 times less risky than InPlay Oil. It trades about 0.03 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.03 per unit of risk. If you would invest 2,581 in Eni SpA ADR on August 29, 2024 and sell it today you would earn a total of 241.00 from holding Eni SpA ADR or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. InPlay Oil Corp
Performance |
| Timeline |
| Eni SpA ADR |
| InPlay Oil Corp |
Eni SPA and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and InPlay Oil
The main advantage of trading using opposite Eni SPA and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil'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 |
| InPlay Oil vs. Yamaha Motor Co | InPlay Oil vs. Nitto Denko Corp | InPlay Oil vs. Farmers Merchants Bancorp | InPlay Oil vs. Furukawa Electric Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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