Correlation Between Altagas Cum and Eni SPA

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Can any of the company-specific risk be diversified away by investing in both Altagas Cum 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 Altagas Cum and Eni SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altagas Cum Red and Enterprise Group, you can compare the effects of market volatilities on Altagas Cum 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 Altagas Cum with a short position of Eni SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altagas Cum and Eni SPA.

Diversification Opportunities for Altagas Cum and Eni SPA

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Altagas and Eni is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Altagas Cum Red and Enterprise Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Group and Altagas Cum 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 Altagas Cum Red 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 Enterprise Group has no effect on the direction of Altagas Cum i.e., Altagas Cum and Eni SPA go up and down completely randomly.

Pair Corralation between Altagas Cum and Eni SPA

Assuming the 90 days trading horizon Altagas Cum Red is expected to generate 0.13 times more return on investment than Eni SPA. However, Altagas Cum Red is 7.89 times less risky than Eni SPA. It trades about 0.49 of its potential returns per unit of risk. Enterprise Group is currently generating about -0.2 per unit of risk. If you would invest  1,919  in Altagas Cum Red on September 23, 2024 and sell it today you would earn a total of  101.00  from holding Altagas Cum Red or generate 5.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Altagas Cum Red  vs.  Enterprise Group

 Performance 
       Timeline  
Altagas Cum Red 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Altagas Cum Red are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Altagas Cum may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Enterprise Group 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Enterprise Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Eni SPA displayed solid returns over the last few months and may actually be approaching a breakup point.

Altagas Cum and Eni SPA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Altagas Cum and Eni SPA

The main advantage of trading using opposite Altagas Cum and Eni SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altagas Cum 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.
The idea behind Altagas Cum Red and Enterprise Group 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.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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