Correlation Between Eni SPA and HF Sinclair

Can any of the company-specific risk be diversified away by investing in both Eni SPA and HF Sinclair 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 HF Sinclair 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 HF Sinclair Corp, you can compare the effects of market volatilities on Eni SPA and HF Sinclair 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 HF Sinclair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and HF Sinclair.

Diversification Opportunities for Eni SPA and HF Sinclair

0.69

Correlation Coefficient

Eni SPA  HF Sinclair

Poor diversification

The 3 months correlation between Eni and DINO is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and HF Sinclair Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF Sinclair Corp 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 HF Sinclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF Sinclair Corp has no effect on the direction of Eni SPA i.e., Eni SPA and HF Sinclair go up and down completely randomly.

Pair Corralation between Eni SPA and HF Sinclair

Taking into account the 90-day investment horizon Eni SpA ADR is expected to generate 0.64 times more return on investment than HF Sinclair. However, Eni SpA ADR is 1.56 times less risky than HF Sinclair. It trades about 0.03 of its potential returns per unit of risk. HF Sinclair Corp is currently generating about 0.0 per unit of risk. If you would invest  2,486  in Eni SpA ADR on August 27, 2024 and sell it today you would earn a total of  415.00  from holding Eni SpA ADR or generate 16.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Eni SpA ADR  vs.  HF Sinclair Corp

Eni SpA ADR

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

HF Sinclair Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Eni SPA and HF Sinclair

The main advantage of trading using opposite Eni SPA and HF Sinclair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eni SPA position performs unexpectedly, HF Sinclair 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 HF Sinclair will offset losses from the drop in HF Sinclair's long position.

The idea behind Eni SpA ADR and HF Sinclair Corp 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.