Correlation Between Equinor ASA and BW LPG
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and BW LPG 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 BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA and BW LPG, you can compare the effects of market volatilities on Equinor ASA and BW LPG 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 BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and BW LPG.
Diversification Opportunities for Equinor ASA and BW LPG
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Equinor and BWLPG is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and BW LPG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG 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 BW LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW LPG has no effect on the direction of Equinor ASA i.e., Equinor ASA and BW LPG go up and down completely randomly.
Pair Corralation between Equinor ASA and BW LPG
Assuming the 90 days trading horizon Equinor ASA is expected to generate 11.8 times less return on investment than BW LPG. But when comparing it to its historical volatility, Equinor ASA is 1.68 times less risky than BW LPG. It trades about 0.01 of its potential returns per unit of risk. BW LPG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,419 in BW LPG on August 31, 2024 and sell it today you would earn a total of 5,971 from holding BW LPG or generate 80.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA vs. BW LPG
Performance |
| Timeline |
| Equinor ASA |
| BW LPG |
Equinor ASA and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and BW LPG
The main advantage of trading using opposite Equinor ASA and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, BW LPG 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 BW LPG will offset losses from the drop in BW LPG's long position.| Equinor ASA vs. DnB ASA | Equinor ASA vs. Mowi ASA | Equinor ASA vs. Yara International ASA | Equinor ASA vs. Telenor 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |