Correlation Between Eni SPA and Whitecap Resources
Can any of the company-specific risk be diversified away by investing in both Eni SPA and Whitecap Resources 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 Whitecap Resources 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 Whitecap Resources, you can compare the effects of market volatilities on Eni SPA and Whitecap Resources 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 Whitecap Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Whitecap Resources.
Diversification Opportunities for Eni SPA and Whitecap Resources
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eni and Whitecap is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources 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 Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Eni SPA i.e., Eni SPA and Whitecap Resources go up and down completely randomly.
Pair Corralation between Eni SPA and Whitecap Resources
Taking into account the 90-day investment horizon Eni SpA ADR is expected to under-perform the Whitecap Resources. But the stock apears to be less risky and, when comparing its historical volatility, Eni SpA ADR is 1.46 times less risky than Whitecap Resources. The stock trades about -0.02 of its potential returns per unit of risk. The Whitecap Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 640.00 in Whitecap Resources on August 29, 2024 and sell it today you would earn a total of 83.00 from holding Whitecap Resources or generate 12.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. Whitecap Resources
Performance |
| Timeline |
| Eni SpA ADR |
| Whitecap Resources |
Eni SPA and Whitecap Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and Whitecap Resources
The main advantage of trading using opposite Eni SPA and Whitecap Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, Whitecap Resources 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 Whitecap Resources will offset losses from the drop in Whitecap Resources' 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 |
| Whitecap Resources vs. Athabasca Oil Corp | Whitecap Resources vs. Headwater Exploration | Whitecap Resources vs. Tamarack Valley Energy | Whitecap Resources vs. Birchcliff Energy |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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