Correlation Between Tenaris SA and Eni SPA
Can any of the company-specific risk be diversified away by investing in both Tenaris SA 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 Tenaris SA and Eni SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenaris SA ADR and Eni SpA ADR, you can compare the effects of market volatilities on Tenaris SA 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 Tenaris SA with a short position of Eni SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Eni SPA.
Diversification Opportunities for Tenaris SA and Eni SPA
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tenaris and Eni is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR 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 Tenaris SA 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 Tenaris SA ADR 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 Tenaris SA i.e., Tenaris SA and Eni SPA go up and down completely randomly.
Pair Corralation between Tenaris SA and Eni SPA
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to generate 1.93 times more return on investment than Eni SPA. However, Tenaris SA is 1.93 times more volatile than Eni SpA ADR. It trades about 0.38 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 3,183 in Tenaris SA ADR on August 27, 2024 and sell it today you would earn a total of 559.00 from holding Tenaris SA ADR or generate 17.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenaris SA ADR vs. Eni SpA ADR
Performance |
| Timeline |
| Tenaris SA ADR |
| Eni SpA ADR |
Tenaris SA and Eni SPA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenaris SA and Eni SPA
The main advantage of trading using opposite Tenaris SA and Eni SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA 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.| Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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