Correlation Between Equinor ASA and Pacific Energy
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Pacific 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 Pacific 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 Pacific Energy Mining, you can compare the effects of market volatilities on Equinor ASA and Pacific 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 Pacific Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Pacific Energy.
Diversification Opportunities for Equinor ASA and Pacific Energy
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equinor and Pacific is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA ADR and Pacific Energy Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Energy Mining 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 Pacific Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Energy Mining has no effect on the direction of Equinor ASA i.e., Equinor ASA and Pacific Energy go up and down completely randomly.
Pair Corralation between Equinor ASA and Pacific Energy
If you would invest 2,399 in Equinor ASA ADR on August 31, 2024 and sell it today you would earn a total of 38.00 from holding Equinor ASA ADR or generate 1.58% 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. Pacific Energy Mining
Performance |
| Timeline |
| Equinor ASA ADR |
| Pacific Energy Mining |
Equinor ASA and Pacific Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Pacific Energy
The main advantage of trading using opposite Equinor ASA and Pacific Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Pacific 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 Pacific Energy will offset losses from the drop in Pacific Energy's long position.| Equinor ASA vs. RLJ Lodging Trust | Equinor ASA vs. Aquagold International | Equinor ASA vs. Stepstone Group | Equinor ASA vs. Morningstar Unconstrained Allocation |
| Pacific Energy vs. Equinor ASA ADR | Pacific Energy vs. TotalEnergies SE ADR | Pacific Energy vs. Ecopetrol SA ADR | Pacific Energy vs. National Fuel Gas |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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