Correlation Between Imperial Oil and Eni SPA
Can any of the company-specific risk be diversified away by investing in both Imperial Oil and Eni SPA 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 Imperial Oil and Eni SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Oil and Eni SpA ADR, you can compare the effects of market volatilities on Imperial Oil and Eni SPA 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 Imperial Oil with a short position of Eni SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Oil and Eni SPA.
Diversification Opportunities for Imperial Oil and Eni SPA
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Imperial and Eni is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Oil and Eni SpA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eni SpA ADR and Imperial Oil 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 Imperial Oil are associated (or correlated) with Eni SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eni SpA ADR has no effect on the direction of Imperial Oil i.e., Imperial Oil and Eni SPA go up and down completely randomly.
Pair Corralation between Imperial Oil and Eni SPA
Considering the 90-day investment horizon Imperial Oil is expected to generate 1.57 times more return on investment than Eni SPA. However, Imperial Oil is 1.57 times more volatile than Eni SpA ADR. It trades about 0.05 of its potential returns per unit of risk. Eni SpA ADR is currently generating about -0.13 per unit of risk. If you would invest 7,453 in Imperial Oil on August 27, 2024 and sell it today you would earn a total of 115.00 from holding Imperial Oil or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Oil vs. Eni SpA ADR
Performance |
| Timeline |
| Imperial Oil |
| Eni SpA ADR |
Imperial Oil and Eni SPA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Oil and Eni SPA
The main advantage of trading using opposite Imperial Oil and Eni SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Oil position performs unexpectedly, Eni SPA 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 Eni SPA will offset losses from the drop in Eni SPA's long position.| Imperial Oil vs. Suncor Energy | Imperial Oil vs. Ecopetrol SA ADR | Imperial Oil vs. Petroleo Brasileiro Petrobras | Imperial Oil vs. Equinor ASA ADR |
| Eni SPA vs. TotalEnergies SE ADR | Eni SPA vs. Ecopetrol SA ADR | Eni SPA vs. Shell PLC ADR | Eni SPA vs. Petroleo Brasileiro Petrobras |
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 Stocks Directory module to find actively traded stocks across global markets.
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