Correlation Between Eni SPA and Orca Energy
Can any of the company-specific risk be diversified away by investing in both Eni SPA and Orca 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 Orca 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 Orca Energy Group, you can compare the effects of market volatilities on Eni SPA and Orca 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 Orca Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Orca Energy.
Diversification Opportunities for Eni SPA and Orca Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eni and Orca is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Orca Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orca Energy Group 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 Orca Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orca Energy Group has no effect on the direction of Eni SPA i.e., Eni SPA and Orca Energy go up and down completely randomly.
Pair Corralation between Eni SPA and Orca Energy
Taking into account the 90-day investment horizon Eni SpA ADR is expected to under-perform the Orca Energy. But the stock apears to be less risky and, when comparing its historical volatility, Eni SpA ADR is 2.68 times less risky than Orca Energy. The stock trades about -0.24 of its potential returns per unit of risk. The Orca Energy Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 199.00 in Orca Energy Group on September 3, 2024 and sell it today you would earn a total of 6.00 from holding Orca Energy Group or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. Orca Energy Group
Performance |
| Timeline |
| Eni SpA ADR |
| Orca Energy Group |
Eni SPA and Orca Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and Orca Energy
The main advantage of trading using opposite Eni SPA and Orca Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, Orca 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 Orca Energy will offset losses from the drop in Orca 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 |
| Orca Energy vs. PetroShale | Orca Energy vs. Questerre Energy | Orca Energy vs. Petrus Resources | Orca Energy vs. Inpex Corp ADR |
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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