Correlation Between Imperial Petroleum and Eni SPA

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

By analyzing existing cross correlation between Imperial Petroleum Preferred and Eni SpA ADR, you can compare the effects of market volatilities on Imperial Petroleum 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 Imperial Petroleum with a short position of Eni SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Petroleum and Eni SPA.

Diversification Opportunities for Imperial Petroleum and Eni SPA

-0.21

Correlation Coefficient

Imperial Petroleum  Eni SPA

Very good diversification

The 3 months correlation between Imperial and Eni is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum Preferred 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 Imperial Petroleum 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 Imperial Petroleum Preferred 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 Imperial Petroleum i.e., Imperial Petroleum and Eni SPA go up and down completely randomly.

Pair Corralation between Imperial Petroleum and Eni SPA

Assuming the 90 days horizon Imperial Petroleum is expected to generate 22.62 times less return on investment than Eni SPA. But when comparing it to its historical volatility, Imperial Petroleum Preferred is 1.62 times less risky than Eni SPA. It trades about 0.02 of its potential returns per unit of risk. Eni SpA ADR is currently generating about 0.25 of returns per unit of risk over similar time horizon. 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	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Imperial Petroleum Preferred  vs.  Eni SpA ADR

Imperial Petroleum

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Petroleum Preferred are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Imperial Petroleum is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Imperial Petroleum and Eni SPA

The main advantage of trading using opposite Imperial Petroleum and Eni SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Petroleum 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 Imperial Petroleum Preferred and Eni SpA 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.