Correlation Between Eni SpA and BP Plc
Can any of the company-specific risk be diversified away by investing in both Eni 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 Eni 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 Eni SpA and BP plc, you can compare the effects of market volatilities on Eni 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 Eni SpA with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SpA and BP Plc.
Diversification Opportunities for Eni SpA and BP Plc
Modest diversification
The 3 months correlation between Eni and BPAQF is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc 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 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 Eni SpA i.e., Eni SpA and BP Plc go up and down completely randomly.
Pair Corralation between Eni SpA and BP Plc
Assuming the 90 days horizon Eni SpA is expected to generate 17.22 times less return on investment than BP Plc. In addition to that, Eni SpA is 1.55 times more volatile than BP plc. It trades about 0.0 of its total potential returns per unit of risk. BP plc is currently generating about 0.1 per unit of volatility. If you would invest 489.00 in BP plc on December 2, 2024 and sell it today you would earn a total of 54.00 from holding BP plc or generate 11.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 78.69% |
Values | Daily Returns |
Eni SpA vs. BP plc
Performance |
Timeline |
Eni SpA |
BP plc |
Eni SpA and BP Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eni SpA and BP Plc
The main advantage of trading using opposite Eni SpA and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni 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.The idea behind Eni SpA and BP plc 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.BP Plc vs. Unit Corporation | BP Plc vs. Galp Energa | BP Plc vs. Ecopetrol SA ADR | BP Plc vs. Equinor ASA ADR |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Stocks Directory Find actively traded stocks across global markets | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |