Correlation Between Equinor ASA and Calfrac Well
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Calfrac Well 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 Calfrac Well into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA ADR and Calfrac Well Services, you can compare the effects of market volatilities on Equinor ASA and Calfrac Well 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 Calfrac Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Calfrac Well.
Diversification Opportunities for Equinor ASA and Calfrac Well
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Equinor and Calfrac is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA ADR and Calfrac Well Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calfrac Well Services 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 ADR are associated (or correlated) with Calfrac Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calfrac Well Services has no effect on the direction of Equinor ASA i.e., Equinor ASA and Calfrac Well go up and down completely randomly.
Pair Corralation between Equinor ASA and Calfrac Well
Given the investment horizon of 90 days Equinor ASA ADR is expected to generate 0.72 times more return on investment than Calfrac Well. However, Equinor ASA ADR is 1.4 times less risky than Calfrac Well. It trades about -0.01 of its potential returns per unit of risk. Calfrac Well Services is currently generating about -0.03 per unit of risk. If you would invest 2,966 in Equinor ASA ADR on September 2, 2024 and sell it today you would lose (548.00) from holding Equinor ASA ADR or give up 18.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA ADR vs. Calfrac Well Services
Performance |
| Timeline |
| Equinor ASA ADR |
| Calfrac Well Services |
Equinor ASA and Calfrac Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Calfrac Well
The main advantage of trading using opposite Equinor ASA and Calfrac Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Calfrac Well 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 Calfrac Well will offset losses from the drop in Calfrac Well's long position.| Equinor ASA vs. Shell PLC ADR | Equinor ASA vs. BP PLC ADR | Equinor ASA vs. Eni SpA ADR | Equinor ASA vs. Galp Energa |
| Calfrac Well vs. Petroleo Brasileiro Petrobras | Calfrac Well vs. Equinor ASA ADR | Calfrac Well vs. Eni SpA ADR | Calfrac Well vs. YPF Sociedad Anonima |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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