Correlation Between First Solar and Eni SPA

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both First Solar 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 First Solar and Eni SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and Eni SpA ADR, you can compare the effects of market volatilities on First Solar 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 First Solar with a short position of Eni SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Eni SPA.

Diversification Opportunities for First Solar and Eni SPA

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between First and Eni is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding First Solar 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 First Solar 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 First Solar 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 First Solar i.e., First Solar and Eni SPA go up and down completely randomly.

Pair Corralation between First Solar and Eni SPA

Given the investment horizon of 90 days First Solar is expected to generate 2.56 times more return on investment than Eni SPA. However, First Solar is 2.56 times more volatile than Eni SpA ADR. It trades about 0.22 of its potential returns per unit of risk. Eni SpA ADR is currently generating about 0.18 per unit of risk. If you would invest  14,925  in First Solar on December 30, 2023 and sell it today you would earn a total of  1,955  from holding First Solar or generate 13.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

First Solar  vs.  Eni SpA ADR

 Performance 
       Timeline  
First Solar 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days First Solar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, First Solar is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
Eni SpA ADR 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Eni SpA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Eni SPA is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

First Solar and Eni SPA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Solar and Eni SPA

The main advantage of trading using opposite First Solar and Eni SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar 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 First Solar 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.
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

Other Complementary Tools

Equity Valuation
Check real value of public entities based on technical and fundamental data
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules