Correlation Between Eni SpA and Eneos Holdings

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

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

Diversification Opportunities for Eni SpA and Eneos Holdings

-0.31

Correlation Coefficient

Eni SpA  Eneos Holdings

Very good diversification

The 3 months correlation between Eni and Eneos is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA and Eneos Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneos Holdings ADR 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 Eneos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneos Holdings ADR has no effect on the direction of Eni SpA i.e., Eni SpA and Eneos Holdings go up and down completely randomly.

Pair Corralation between Eni SpA and Eneos Holdings

Assuming the 90 days horizon Eni SpA is expected to under-perform the Eneos Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Eni SpA is 2.93 times less risky than Eneos Holdings. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Eneos Holdings ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,025  in Eneos Holdings ADR on September 4, 2024 and sell it today you would earn a total of  28.00  from holding Eneos Holdings ADR or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eni SpA  vs.  Eneos Holdings ADR

Eni SpA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eni SpA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Eni SpA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eneos Holdings ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eneos Holdings ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Eneos Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eni SpA and Eneos Holdings

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

The idea behind Eni SpA and Eneos Holdings ADR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.