Correlation Between Eni SpA and Federal Home
Can any of the company-specific risk be diversified away by investing in both Eni SpA and Federal Home 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 Eni SpA and Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eni SpA and Federal Home Loan, you can compare the effects of market volatilities on Eni SpA and Federal Home 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 Eni SpA with a short position of Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SpA and Federal Home.
Diversification Opportunities for Eni SpA and Federal Home
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eni and Federal is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan and Eni SpA 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 Eni SpA are associated (or correlated) with Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Eni SpA i.e., Eni SpA and Federal Home go up and down completely randomly.
Pair Corralation between Eni SpA and Federal Home
Assuming the 90 days horizon Eni SpA is expected to generate 1.28 times more return on investment than Federal Home. However, Eni SpA is 1.28 times more volatile than Federal Home Loan. It trades about 0.04 of its potential returns per unit of risk. Federal Home Loan is currently generating about 0.02 per unit of risk. If you would invest 1,258 in Eni SpA on January 20, 2024 and sell it today you would earn a total of 351.00 from holding Eni SpA or generate 27.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.87% |
| Values | Daily Returns |
Eni SpA vs. Federal Home Loan
Performance |
| Timeline |
| Eni SpA |
| Federal Home Loan |
Eni SpA and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SpA and Federal Home
The main advantage of trading using opposite Eni SpA and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SpA position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.| Eni SpA vs. Equinor ASA ADR | Eni SpA vs. TotalEnergies SE ADR | Eni SpA vs. Ecopetrol SA ADR | Eni SpA vs. National Fuel Gas |
| Federal Home vs. Federal Home Loan | Federal Home vs. Federal Home Loan | Federal Home vs. Federal Home Loan | Federal Home vs. Federal National Mortgage |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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