Correlation Between Equinor ASA and Isoenergy
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Isoenergy 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 Isoenergy 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 Isoenergy, you can compare the effects of market volatilities on Equinor ASA and Isoenergy 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 Isoenergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Isoenergy.
Diversification Opportunities for Equinor ASA and Isoenergy
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Equinor and Isoenergy is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA ADR and Isoenergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isoenergy 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 Isoenergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isoenergy has no effect on the direction of Equinor ASA i.e., Equinor ASA and Isoenergy go up and down completely randomly.
Pair Corralation between Equinor ASA and Isoenergy
Given the investment horizon of 90 days Equinor ASA ADR is expected to generate 0.63 times more return on investment than Isoenergy. However, Equinor ASA ADR is 1.59 times less risky than Isoenergy. It trades about -0.01 of its potential returns per unit of risk. Isoenergy is currently generating about -0.09 per unit of risk. If you would invest 2,408 in Equinor ASA ADR on August 28, 2024 and sell it today you would lose (18.00) from holding Equinor ASA ADR or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA ADR vs. Isoenergy
Performance |
| Timeline |
| Equinor ASA ADR |
| Isoenergy |
Equinor ASA and Isoenergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Isoenergy
The main advantage of trading using opposite Equinor ASA and Isoenergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Isoenergy 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 Isoenergy will offset losses from the drop in Isoenergy's long position.The idea behind Equinor ASA ADR and Isoenergy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Isoenergy vs. Petroleo Brasileiro Petrobras | Isoenergy vs. Equinor ASA ADR | Isoenergy vs. Eni SpA ADR | Isoenergy 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Positions Ratings 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 |