Correlation Between Eni SpA and Exxon Mobil
Can any of the company-specific risk be diversified away by investing in both Eni SpA and Exxon Mobil 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 Exxon Mobil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eni SpA and Exxon Mobil, you can compare the effects of market volatilities on Eni SpA and Exxon Mobil 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 Exxon Mobil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SpA and Exxon Mobil.
Diversification Opportunities for Eni SpA and Exxon Mobil
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eni and Exxon is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil 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 Exxon Mobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil has no effect on the direction of Eni SpA i.e., Eni SpA and Exxon Mobil go up and down completely randomly.
Pair Corralation between Eni SpA and Exxon Mobil
Assuming the 90 days horizon Eni SpA is expected to generate 1.26 times less return on investment than Exxon Mobil. But when comparing it to its historical volatility, Eni SpA is 1.17 times less risky than Exxon Mobil. It trades about 0.02 of its potential returns per unit of risk. Exxon Mobil is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,530 in Exxon Mobil on September 19, 2024 and sell it today you would earn a total of 818.00 from holding Exxon Mobil or generate 8.58% 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 vs. Exxon Mobil
Performance |
| Timeline |
| Eni SpA |
| Exxon Mobil |
Eni SpA and Exxon Mobil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SpA and Exxon Mobil
The main advantage of trading using opposite Eni SpA and Exxon Mobil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SpA position performs unexpectedly, Exxon Mobil 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 Exxon Mobil will offset losses from the drop in Exxon Mobil's long position.The idea behind Eni SpA and Exxon Mobil 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.| Exxon Mobil vs. Apple Inc | Exxon Mobil vs. Apple Inc | Exxon Mobil vs. Apple Inc | Exxon Mobil vs. Apple Inc |
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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