Correlation Between Enel SpA and BP Plc
Can any of the company-specific risk be diversified away by investing in both Enel SpA and BP Plc 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 Enel SpA and BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enel SpA and BP plc, you can compare the effects of market volatilities on Enel SpA and BP Plc 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 Enel SpA with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel SpA and BP Plc.
Diversification Opportunities for Enel SpA and BP Plc
Weak diversification
The 3 months correlation between Enel and BPE5 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Enel SpA and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc and Enel 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 Enel SpA are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Enel SpA i.e., Enel SpA and BP Plc go up and down completely randomly.
Pair Corralation between Enel SpA and BP Plc
Assuming the 90 days horizon Enel SpA is expected to generate 0.62 times more return on investment than BP Plc. However, Enel SpA is 1.6 times less risky than BP Plc. It trades about 0.1 of its potential returns per unit of risk. BP plc is currently generating about -0.07 per unit of risk. If you would invest 630.00 in Enel SpA on September 19, 2024 and sell it today you would earn a total of 75.00 from holding Enel SpA or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel SpA vs. BP plc
Performance |
| Timeline |
| Enel SpA |
| BP plc |
Enel SpA and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel SpA and BP Plc
The main advantage of trading using opposite Enel SpA and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel SpA position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| Enel SpA vs. Park Hotels Resorts | Enel SpA vs. Canon Marketing Japan | Enel SpA vs. Host Hotels Resorts | Enel SpA vs. Tradegate AG Wertpapierhandelsbank |
| BP Plc vs. TOREX SEMICONDUCTOR LTD | BP Plc vs. Sixt Leasing SE | BP Plc vs. Taiwan Semiconductor Manufacturing | BP Plc vs. Global Ship Lease |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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