Correlation Between Eni SPA and USA Compression
Can any of the company-specific risk be diversified away by investing in both Eni SPA and USA Compression 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 USA Compression 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 USA Compression Partners, you can compare the effects of market volatilities on Eni SPA and USA Compression 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 USA Compression. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and USA Compression.
Diversification Opportunities for Eni SPA and USA Compression
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eni and USA is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and USA Compression Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Compression Partners 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 USA Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Compression Partners has no effect on the direction of Eni SPA i.e., Eni SPA and USA Compression go up and down completely randomly.
Pair Corralation between Eni SPA and USA Compression
Taking into account the 90-day investment horizon Eni SpA ADR is expected to under-perform the USA Compression. But the stock apears to be less risky and, when comparing its historical volatility, Eni SpA ADR is 1.15 times less risky than USA Compression. The stock trades about -0.1 of its potential returns per unit of risk. The USA Compression Partners is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,238 in USA Compression Partners on August 30, 2024 and sell it today you would earn a total of 155.00 from holding USA Compression Partners or generate 6.93% 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. USA Compression Partners
Performance |
| Timeline |
| Eni SpA ADR |
| USA Compression Partners |
Eni SPA and USA Compression Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and USA Compression
The main advantage of trading using opposite Eni SPA and USA Compression positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, USA Compression 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 USA Compression will offset losses from the drop in USA Compression'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 |
| USA Compression vs. Now Inc | USA Compression vs. Oil States International | USA Compression vs. Oceaneering International | USA Compression vs. Geospace Technologies |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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