Correlation Between Eni SPA and Natural Gas
Can any of the company-specific risk be diversified away by investing in both Eni SPA and Natural Gas 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 Natural Gas 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 Natural Gas Services, you can compare the effects of market volatilities on Eni SPA and Natural Gas 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 Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Natural Gas.
Diversification Opportunities for Eni SPA and Natural Gas
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eni and Natural is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Natural Gas Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Services 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 Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Services has no effect on the direction of Eni SPA i.e., Eni SPA and Natural Gas go up and down completely randomly.
Pair Corralation between Eni SPA and Natural Gas
Taking into account the 90-day investment horizon Eni SpA ADR is expected to under-perform the Natural Gas. But the stock apears to be less risky and, when comparing its historical volatility, Eni SpA ADR is 3.18 times less risky than Natural Gas. The stock trades about -0.13 of its potential returns per unit of risk. The Natural Gas Services is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 1,993 in Natural Gas Services on August 27, 2024 and sell it today you would earn a total of 752.00 from holding Natural Gas Services or generate 37.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. Natural Gas Services
Performance |
| Timeline |
| Eni SpA ADR |
| Natural Gas Services |
Eni SPA and Natural Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and Natural Gas
The main advantage of trading using opposite Eni SPA and Natural Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, Natural Gas 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 Natural Gas will offset losses from the drop in Natural Gas' 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 |
| Natural Gas vs. ProPetro Holding Corp | Natural Gas vs. RPC Inc | Natural Gas vs. MRC Global | Natural Gas vs. Expro Group Holdings |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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