Correlation Between Equinor ASA and PetroShale
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and PetroShale 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 PetroShale 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 PetroShale, you can compare the effects of market volatilities on Equinor ASA and PetroShale 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 PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and PetroShale.
Diversification Opportunities for Equinor ASA and PetroShale
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Equinor and PetroShale is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA ADR and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale 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 PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of Equinor ASA i.e., Equinor ASA and PetroShale go up and down completely randomly.
Pair Corralation between Equinor ASA and PetroShale
Given the investment horizon of 90 days Equinor ASA ADR is expected to generate 0.82 times more return on investment than PetroShale. However, Equinor ASA ADR is 1.22 times less risky than PetroShale. It trades about -0.07 of its potential returns per unit of risk. PetroShale is currently generating about -0.2 per unit of risk. If you would invest 2,652 in Equinor ASA ADR on August 29, 2024 and sell it today you would lose (262.00) from holding Equinor ASA ADR or give up 9.88% 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. PetroShale
Performance |
| Timeline |
| Equinor ASA ADR |
| PetroShale |
Equinor ASA and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and PetroShale
The main advantage of trading using opposite Equinor ASA and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, PetroShale 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 PetroShale will offset losses from the drop in PetroShale's long position.| Equinor ASA vs. Chevron Corp | Equinor ASA vs. Merck Company | Equinor ASA vs. Pharvaris BV | Equinor ASA vs. Brinker International |
| PetroShale vs. Yamaha Motor Co | PetroShale vs. Nitto Denko Corp | PetroShale vs. Farmers Merchants Bancorp | PetroShale vs. Furukawa Electric Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |