Correlation Between California Resources and Eni SPA
Can any of the company-specific risk be diversified away by investing in both California Resources 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 California Resources and Eni SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Resources Corp and Eni SpA ADR, you can compare the effects of market volatilities on California Resources 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 California Resources with a short position of Eni SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Resources and Eni SPA.
Diversification Opportunities for California Resources and Eni SPA
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between California and Eni is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding California Resources Corp 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 California Resources 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 California Resources Corp 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 California Resources i.e., California Resources and Eni SPA go up and down completely randomly.
Pair Corralation between California Resources and Eni SPA
Considering the 90-day investment horizon California Resources Corp is expected to under-perform the Eni SPA. In addition to that, California Resources is 1.81 times more volatile than Eni SpA ADR. It trades about -0.1 of its total potential returns per unit of risk. Eni SpA ADR is currently generating about 0.12 per unit of volatility. If you would invest 3,130 in Eni SpA ADR on January 20, 2024 and sell it today you would earn a total of 83.00 from holding Eni SpA ADR or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Resources Corp vs. Eni SpA ADR
Performance |
| Timeline |
| California Resources Corp |
| Eni SpA ADR |
California Resources and Eni SPA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Resources and Eni SPA
The main advantage of trading using opposite California Resources and Eni SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Resources 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 California Resources Corp 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.| Eni SPA vs. Shell PLC ADR | Eni SPA vs. Petroleo Brasileiro Petrobras | Eni SPA vs. Imperial Oil | Eni SPA vs. Petrleo Brasileiro SA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |