Correlation Between Equinor ASA and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Dairy Farm 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 Equinor ASA and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA and Dairy Farm International, you can compare the effects of market volatilities on Equinor ASA and Dairy Farm 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 Equinor ASA with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Dairy Farm.
Diversification Opportunities for Equinor ASA and Dairy Farm
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Equinor and Dairy is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International and Equinor ASA 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 Equinor ASA are associated (or correlated) with Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Equinor ASA i.e., Equinor ASA and Dairy Farm go up and down completely randomly.
Pair Corralation between Equinor ASA and Dairy Farm
Assuming the 90 days horizon Equinor ASA is expected to generate 0.99 times more return on investment than Dairy Farm. However, Equinor ASA is 1.01 times less risky than Dairy Farm. It trades about 0.03 of its potential returns per unit of risk. Dairy Farm International is currently generating about 0.0 per unit of risk. If you would invest 1,625 in Equinor ASA on September 19, 2024 and sell it today you would earn a total of 541.00 from holding Equinor ASA or generate 33.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Equinor ASA vs. Dairy Farm International
Performance |
| Timeline |
| Equinor ASA |
| Dairy Farm International |
Equinor ASA and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Dairy Farm
The main advantage of trading using opposite Equinor ASA and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| Equinor ASA vs. NXP Semiconductors NV | Equinor ASA vs. AGRICULTBK HADR25 YC | Equinor ASA vs. Granite Construction | Equinor ASA vs. Australian Agricultural |
| Dairy Farm vs. Loblaw Companies Limited | Dairy Farm vs. Superior Plus Corp | Dairy Farm vs. SIVERS SEMICONDUCTORS AB | Dairy Farm vs. Norsk Hydro ASA |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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