Correlation Between Eni SPA and Holloman Energy

Can any of the company-specific risk be diversified away by investing in both Eni SPA and Holloman Energy 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 Holloman Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eni SpA ADR and Holloman Energy Corp, you can compare the effects of market volatilities on Eni SPA and Holloman Energy 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 Holloman Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Holloman Energy.

Diversification Opportunities for Eni SPA and Holloman Energy

0.0

Correlation Coefficient

Eni SPA  Holloman Energy

Pay attention - limited upside

The 3 months correlation between Eni and Holloman is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Holloman Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holloman Energy Corp 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 ADR are associated (or correlated) with Holloman Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holloman Energy Corp has no effect on the direction of Eni SPA i.e., Eni SPA and Holloman Energy go up and down completely randomly.

Pair Corralation between Eni SPA and Holloman Energy

If you would invest  2,650  in Eni SpA ADR on December 27, 2024 and sell it today you would earn a total of  441.00  from holding Eni SpA ADR or generate 16.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Eni SpA ADR  vs.  Holloman Energy Corp

Eni SpA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eni SpA ADR are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Eni SPA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Holloman Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Holloman Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Holloman Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eni SPA and Holloman Energy

The main advantage of trading using opposite Eni SPA and Holloman Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, Holloman Energy 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 Holloman Energy will offset losses from the drop in Holloman Energy's long position.

The idea behind Eni SpA ADR and Holloman Energy Corp 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.