Correlation Between Equinor ASA and First Internet
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and First Internet 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 First Internet 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 First Internet Bancorp, you can compare the effects of market volatilities on Equinor ASA and First Internet 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 First Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and First Internet.
Diversification Opportunities for Equinor ASA and First Internet
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equinor and First is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA ADR and First Internet Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Internet Bancorp 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 First Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Internet Bancorp has no effect on the direction of Equinor ASA i.e., Equinor ASA and First Internet go up and down completely randomly.
Pair Corralation between Equinor ASA and First Internet
Given the investment horizon of 90 days Equinor ASA ADR is expected to generate 5.18 times more return on investment than First Internet. However, Equinor ASA is 5.18 times more volatile than First Internet Bancorp. It trades about 0.14 of its potential returns per unit of risk. First Internet Bancorp is currently generating about 0.28 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. First Internet Bancorp
Performance |
| Timeline |
| Equinor ASA ADR |
| First Internet Bancorp |
Equinor ASA and First Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and First Internet
The main advantage of trading using opposite Equinor ASA and First Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, First Internet 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 First Internet will offset losses from the drop in First Internet'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 |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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