Correlation Between Equinor ASA and Forum Energy
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Forum Energy 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 Forum Energy 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 Forum Energy Metals, you can compare the effects of market volatilities on Equinor ASA and Forum Energy 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 Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Forum Energy.
Diversification Opportunities for Equinor ASA and Forum Energy
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equinor and Forum is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA ADR and Forum Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Metals 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 Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Metals has no effect on the direction of Equinor ASA i.e., Equinor ASA and Forum Energy go up and down completely randomly.
Pair Corralation between Equinor ASA and Forum Energy
Given the investment horizon of 90 days Equinor ASA ADR is expected to generate 0.19 times more return on investment than Forum Energy. However, Equinor ASA ADR is 5.3 times less risky than Forum Energy. It trades about 0.14 of its potential returns per unit of risk. Forum Energy Metals is currently generating about -0.05 per unit of risk. If you would invest 2,291 in Equinor ASA ADR on September 1, 2024 and sell it today you would earn a total of 127.00 from holding Equinor ASA ADR or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA ADR vs. Forum Energy Metals
Performance |
| Timeline |
| Equinor ASA ADR |
| Forum Energy Metals |
Equinor ASA and Forum Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Forum Energy
The main advantage of trading using opposite Equinor ASA and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Forum Energy 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 Forum Energy will offset losses from the drop in Forum Energy'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 |
| Forum Energy vs. Petroleo Brasileiro Petrobras | Forum Energy vs. Equinor ASA ADR | Forum Energy vs. Eni SpA ADR | Forum Energy 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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