Correlation Between Equinor ASA and Mowi ASA
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Mowi 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 Mowi 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 Mowi ASA, you can compare the effects of market volatilities on Equinor ASA and Mowi 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 Mowi ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Mowi ASA.
Diversification Opportunities for Equinor ASA and Mowi ASA
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Equinor and Mowi is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and Mowi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mowi 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 Mowi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mowi ASA has no effect on the direction of Equinor ASA i.e., Equinor ASA and Mowi ASA go up and down completely randomly.
Pair Corralation between Equinor ASA and Mowi ASA
Assuming the 90 days trading horizon Equinor ASA is expected to generate 2.43 times less return on investment than Mowi ASA. In addition to that, Equinor ASA is 1.27 times more volatile than Mowi ASA. It trades about 0.01 of its total potential returns per unit of risk. Mowi ASA is currently generating about 0.04 per unit of volatility. If you would invest 17,774 in Mowi ASA on November 27, 2024 and sell it today you would earn a total of 3,666 from holding Mowi ASA or generate 20.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA vs. Mowi ASA
Performance |
| Timeline |
| Equinor ASA |
| Mowi ASA |
Equinor ASA and Mowi ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Mowi ASA
The main advantage of trading using opposite Equinor ASA and Mowi ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Mowi 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 Mowi ASA will offset losses from the drop in Mowi 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 |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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