Correlation Between Eni SPA and Laredo Oil
Can any of the company-specific risk be diversified away by investing in both Eni SPA and Laredo 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 Laredo 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 Laredo Oil, you can compare the effects of market volatilities on Eni SPA and Laredo 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 Laredo Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Laredo Oil.
Diversification Opportunities for Eni SPA and Laredo Oil
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eni and Laredo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Laredo Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laredo Oil 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 Laredo Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laredo Oil has no effect on the direction of Eni SPA i.e., Eni SPA and Laredo Oil go up and down completely randomly.
Pair Corralation between Eni SPA and Laredo Oil
Taking into account the 90-day investment horizon Eni SPA is expected to generate 16.36 times less return on investment than Laredo Oil. But when comparing it to its historical volatility, Eni SpA ADR is 8.27 times less risky than Laredo Oil. It trades about 0.03 of its potential returns per unit of risk. Laredo Oil is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Laredo Oil on November 19, 2024 and sell it today you would earn a total of 26.00 from holding Laredo Oil or generate 144.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Eni SpA ADR vs. Laredo Oil
Performance |
| Timeline |
| Eni SpA ADR |
| Laredo Oil |
Eni SPA and Laredo Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and Laredo Oil
The main advantage of trading using opposite Eni SPA and Laredo Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, Laredo 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 Laredo Oil will offset losses from the drop in Laredo 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 |
| Laredo Oil vs. Petroleo Brasileiro Petrobras | Laredo Oil vs. Equinor ASA ADR | Laredo Oil vs. Eni SpA ADR | Laredo Oil 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 Stocks Directory module to find actively traded stocks across global markets.
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