Correlation Between Eni SPA and Isoenergy
Can any of the company-specific risk be diversified away by investing in both Eni SPA and Isoenergy 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 Isoenergy 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 Isoenergy, you can compare the effects of market volatilities on Eni SPA and Isoenergy 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 Isoenergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Isoenergy.
Diversification Opportunities for Eni SPA and Isoenergy
Average diversification
The 3 months correlation between Eni and Isoenergy is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Isoenergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isoenergy 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 Isoenergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isoenergy has no effect on the direction of Eni SPA i.e., Eni SPA and Isoenergy go up and down completely randomly.
Pair Corralation between Eni SPA and Isoenergy
Taking into account the 90-day investment horizon Eni SpA ADR is expected to generate 0.33 times more return on investment than Isoenergy. However, Eni SpA ADR is 3.01 times less risky than Isoenergy. It trades about -0.24 of its potential returns per unit of risk. Isoenergy is currently generating about -0.09 per unit of risk. If you would invest 2,989 in Eni SpA ADR on August 28, 2024 and sell it today you would lose (177.00) from holding Eni SpA ADR or give up 5.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. Isoenergy
Performance |
| Timeline |
| Eni SpA ADR |
| Isoenergy |
Eni SPA and Isoenergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and Isoenergy
The main advantage of trading using opposite Eni SPA and Isoenergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, Isoenergy 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 Isoenergy will offset losses from the drop in Isoenergy'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 |
| Isoenergy vs. Petroleo Brasileiro Petrobras | Isoenergy vs. Equinor ASA ADR | Isoenergy vs. Eni SpA ADR | Isoenergy 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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