Correlation Between Equinor ASA and DnB ASA
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and DnB ASA 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 DnB ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA and DnB ASA, you can compare the effects of market volatilities on Equinor ASA and DnB ASA 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 DnB ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and DnB ASA.
Diversification Opportunities for Equinor ASA and DnB ASA
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Equinor and DnB is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and DnB ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DnB ASA 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 DnB ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DnB ASA has no effect on the direction of Equinor ASA i.e., Equinor ASA and DnB ASA go up and down completely randomly.
Pair Corralation between Equinor ASA and DnB ASA
Assuming the 90 days trading horizon Equinor ASA is expected to generate 3.31 times more return on investment than DnB ASA. However, Equinor ASA is 3.31 times more volatile than DnB ASA. It trades about 0.39 of its potential returns per unit of risk. DnB ASA is currently generating about 0.64 per unit of risk. If you would invest 25,445 in Equinor ASA on October 21, 2024 and sell it today you would earn a total of 3,115 from holding Equinor ASA or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA vs. DnB ASA
Performance |
| Timeline |
| Equinor ASA |
| DnB ASA |
Equinor ASA and DnB ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and DnB ASA
The main advantage of trading using opposite Equinor ASA and DnB ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, DnB ASA 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 DnB ASA will offset losses from the drop in DnB ASA's long position.| Equinor ASA vs. DnB ASA | Equinor ASA vs. Mowi ASA | Equinor ASA vs. Yara International ASA | Equinor ASA vs. Telenor ASA |
| DnB ASA vs. Telenor ASA | DnB ASA vs. Storebrand ASA | DnB ASA vs. Orkla ASA | DnB ASA vs. Gjensidige Forsikring 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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