Correlation Between Eni SPA and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both Eni SPA and TotalEnergies 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 TotalEnergies 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 TotalEnergies SE, you can compare the effects of market volatilities on Eni SPA and TotalEnergies 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 TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and TotalEnergies.
Diversification Opportunities for Eni SPA and TotalEnergies
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eni and TotalEnergies is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and TotalEnergies SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE 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 TotalEnergies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TotalEnergies SE has no effect on the direction of Eni SPA i.e., Eni SPA and TotalEnergies go up and down completely randomly.
Pair Corralation between Eni SPA and TotalEnergies
Taking into account the 90-day investment horizon Eni SpA ADR is expected to generate 0.6 times more return on investment than TotalEnergies. However, Eni SpA ADR is 1.68 times less risky than TotalEnergies. It trades about -0.18 of its potential returns per unit of risk. TotalEnergies SE is currently generating about -0.3 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 (124.00) from holding Eni SpA ADR or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eni SpA ADR vs. TotalEnergies SE
Performance |
| Timeline |
| Eni SpA ADR |
| TotalEnergies SE |
Eni SPA and TotalEnergies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and TotalEnergies
The main advantage of trading using opposite Eni SPA and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, TotalEnergies 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 TotalEnergies will offset losses from the drop in TotalEnergies' 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 |
| TotalEnergies vs. MOL PLC ADR | TotalEnergies vs. PetroChina Co Ltd | TotalEnergies vs. Equinor ASA | TotalEnergies vs. Shell PLC |
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 CEOs Directory module to screen CEOs from public companies around the world.
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