Correlation Between Eneos Holdings and Eni SpA

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

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

Diversification Opportunities for Eneos Holdings and Eni SpA

0.37

Correlation Coefficient

Eneos Holdings  Eni SpA

Weak diversification

The 3 months correlation between Eneos and Eni is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Eneos Holdings ADR and Eni SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eni SpA and Eneos Holdings 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 Eneos Holdings ADR 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 has no effect on the direction of Eneos Holdings i.e., Eneos Holdings and Eni SpA go up and down completely randomly.

Pair Corralation between Eneos Holdings and Eni SpA

Assuming the 90 days horizon Eneos Holdings is expected to generate 1.57 times less return on investment than Eni SpA. In addition to that, Eneos Holdings is 2.07 times more volatile than Eni SpA. It trades about 0.04 of its total potential returns per unit of risk. Eni SpA is currently generating about 0.14 per unit of volatility. If you would invest  1,341  in Eni SpA on December 27, 2024 and sell it today you would earn a total of  310.00  from holding Eni SpA or generate 23.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Eneos Holdings ADR  vs.  Eni SpA

Eneos Holdings ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eneos Holdings ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Eneos Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Eni SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eni SpA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Eni SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eneos Holdings and Eni SpA

The main advantage of trading using opposite Eneos Holdings and Eni SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eneos Holdings 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 Eneos Holdings ADR and Eni SpA 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.