Correlation Between Equinor ASA and Yara International
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Yara International 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 Yara International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA and Yara International ASA, you can compare the effects of market volatilities on Equinor ASA and Yara International 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 Yara International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Yara International.
Diversification Opportunities for Equinor ASA and Yara International
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Equinor and Yara is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International 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 Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of Equinor ASA i.e., Equinor ASA and Yara International go up and down completely randomly.
Pair Corralation between Equinor ASA and Yara International
Assuming the 90 days trading horizon Equinor ASA is expected to generate 1.68 times more return on investment than Yara International. However, Equinor ASA is 1.68 times more volatile than Yara International ASA. It trades about 0.39 of its potential returns per unit of risk. Yara International ASA is currently generating about 0.57 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA vs. Yara International ASA
Performance |
| Timeline |
| Equinor ASA |
| Yara International ASA |
Equinor ASA and Yara International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Yara International
The main advantage of trading using opposite Equinor ASA and Yara International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Yara International 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 Yara International will offset losses from the drop in Yara International's long position.| Equinor ASA vs. DnB ASA | Equinor ASA vs. Mowi ASA | Equinor ASA vs. Yara International ASA | Equinor ASA vs. Telenor ASA |
| Yara International vs. Telenor ASA | Yara International vs. Orkla ASA | Yara International vs. DnB ASA | Yara International vs. Storebrand 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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