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 and TotalEnergies SE ADR, 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
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eni and TotalEnergies is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA and TotalEnergies SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE ADR 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 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 ADR 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
Assuming the 90 days horizon Eni SpA is expected to generate 1.51 times more return on investment than TotalEnergies. However, Eni SpA is 1.51 times more volatile than TotalEnergies SE ADR. It trades about -0.11 of its potential returns per unit of risk. TotalEnergies SE ADR is currently generating about -0.39 per unit of risk. If you would invest 1,605 in Eni SpA on August 28, 2024 and sell it today you would lose (55.00) from holding Eni SpA or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Eni SpA vs. TotalEnergies SE ADR
Performance |
| Timeline |
| Eni SpA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| TotalEnergies SE ADR |
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.The idea behind Eni SpA and TotalEnergies SE ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| TotalEnergies vs. BP PLC ADR | TotalEnergies vs. Chevron Corp | TotalEnergies vs. Exxon Mobil Corp | TotalEnergies vs. Equinor ASA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |