Correlation Between Origin Energy and Eni SpA

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

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

Diversification Opportunities for Origin Energy and Eni SpA

0.01

Correlation Coefficient

Origin Energy  Eni SpA

Significant diversification

The 3 months correlation between Origin and Eni is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Origin Energy Ltd and Eni SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eni SpA and Origin Energy 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 Origin Energy Ltd 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 Origin Energy i.e., Origin Energy and Eni SpA go up and down completely randomly.

Pair Corralation between Origin Energy and Eni SpA

Assuming the 90 days horizon Origin Energy Ltd is expected to generate 0.66 times more return on investment than Eni SpA. However, Origin Energy Ltd is 1.52 times less risky than Eni SpA. It trades about 0.05 of its potential returns per unit of risk. Eni SpA is currently generating about 0.0 per unit of risk. If you would invest  622.00  in Origin Energy Ltd on September 5, 2024 and sell it today you would earn a total of  28.00  from holding Origin Energy Ltd or generate 4.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Origin Energy Ltd  vs.  Eni SpA

Origin Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Energy Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Origin Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eni SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eni SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eni SpA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Origin Energy and Eni SpA

The main advantage of trading using opposite Origin Energy and Eni SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Energy 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 Origin Energy Ltd 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.