Correlation Between Thesis Gold and Eni SPA

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

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

Diversification Opportunities for Thesis Gold and Eni SPA

-0.55

Correlation Coefficient

Thesis Gold  Eni SPA

Excellent diversification

The 3 months correlation between Thesis and Eni is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Thesis Gold and Enterprise Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Group and Thesis Gold 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 Thesis Gold 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 Enterprise Group has no effect on the direction of Thesis Gold i.e., Thesis Gold and Eni SPA go up and down completely randomly.

Pair Corralation between Thesis Gold and Eni SPA

Assuming the 90 days horizon Thesis Gold is expected to under-perform the Eni SPA. But the stock apears to be less risky and, when comparing its historical volatility, Thesis Gold is 1.17 times less risky than Eni SPA. The stock trades about -0.1 of its potential returns per unit of risk. The Enterprise Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  206.00  in Enterprise Group on October 4, 2024 and sell it today you would lose (3.00) from holding Enterprise Group or give up 1.46% of portfolio value over 90 days.

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

Thesis Gold  vs.  Enterprise Group

Thesis Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thesis Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Enterprise Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enterprise Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Eni SPA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thesis Gold and Eni SPA

The main advantage of trading using opposite Thesis Gold and Eni SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thesis Gold 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 Thesis Gold and Enterprise Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.