Correlation Between Eni SPA and Gan Shmuel
Can any of the company-specific risk be diversified away by investing in both Eni SPA and Gan Shmuel 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 Gan Shmuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eni SpA ADR and Gan Shmuel, you can compare the effects of market volatilities on Eni SPA and Gan Shmuel 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 Gan Shmuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and Gan Shmuel.
Diversification Opportunities for Eni SPA and Gan Shmuel
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eni and Gan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and Gan Shmuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan Shmuel 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 ADR are associated (or correlated) with Gan Shmuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan Shmuel has no effect on the direction of Eni SPA i.e., Eni SPA and Gan Shmuel go up and down completely randomly.
Pair Corralation between Eni SPA and Gan Shmuel
Taking into account the 90-day investment horizon Eni SPA is expected to generate 4.39 times less return on investment than Gan Shmuel. But when comparing it to its historical volatility, Eni SpA ADR is 1.86 times less risky than Gan Shmuel. It trades about 0.07 of its potential returns per unit of risk. Gan Shmuel is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 103,730 in Gan Shmuel on January 24, 2024 and sell it today you would earn a total of 140,670 from holding Gan Shmuel or generate 135.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 78.62% |
| Values | Daily Returns |
Eni SpA ADR vs. Gan Shmuel
Performance |
| Timeline |
| Eni SpA ADR |
| Gan Shmuel |
Eni SPA and Gan Shmuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eni SPA and Gan Shmuel
The main advantage of trading using opposite Eni SPA and Gan Shmuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, Gan Shmuel 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 Gan Shmuel will offset losses from the drop in Gan Shmuel's long position.The idea behind Eni SpA ADR and Gan Shmuel 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.| Gan Shmuel vs. Aryt Industries | Gan Shmuel vs. Scope Metals Group | Gan Shmuel vs. Delek Automotive Systems |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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