Correlation Between Equinor ASA and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and InPlay Oil 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 InPlay Oil 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 InPlay Oil Corp, you can compare the effects of market volatilities on Equinor ASA and InPlay Oil 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 InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and InPlay Oil.
Diversification Opportunities for Equinor ASA and InPlay Oil
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Equinor and InPlay is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA ADR and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Equinor ASA i.e., Equinor ASA and InPlay Oil go up and down completely randomly.
Pair Corralation between Equinor ASA and InPlay Oil
Given the investment horizon of 90 days Equinor ASA ADR is expected to generate 0.91 times more return on investment than InPlay Oil. However, Equinor ASA ADR is 1.1 times less risky than InPlay Oil. It trades about -0.01 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.19 per unit of risk. If you would invest 2,486 in Equinor ASA ADR on August 26, 2024 and sell it today you would lose (19.00) from holding Equinor ASA ADR or give up 0.76% 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. InPlay Oil Corp
Performance |
| Timeline |
| Equinor ASA ADR |
| InPlay Oil Corp |
Equinor ASA and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and InPlay Oil
The main advantage of trading using opposite Equinor ASA and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| Equinor ASA vs. Shell PLC ADR | Equinor ASA vs. Suncor Energy | Equinor ASA vs. Cenovus Energy | Equinor ASA vs. Petrleo Brasileiro SA |
| InPlay Oil vs. Petroleo Brasileiro Petrobras | InPlay Oil vs. Equinor ASA ADR | InPlay Oil vs. Eni SpA ADR | InPlay Oil 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 CEOs Directory module to screen CEOs from public companies around the world.
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