Correlation Between Equinor ASA and Whitecap Resources
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Whitecap Resources 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 Whitecap Resources 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 Whitecap Resources, you can compare the effects of market volatilities on Equinor ASA and Whitecap Resources 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 Whitecap Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Whitecap Resources.
Diversification Opportunities for Equinor ASA and Whitecap Resources
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Equinor and Whitecap is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA ADR and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources 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 Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Equinor ASA i.e., Equinor ASA and Whitecap Resources go up and down completely randomly.
Pair Corralation between Equinor ASA and Whitecap Resources
Given the investment horizon of 90 days Equinor ASA ADR is expected to under-perform the Whitecap Resources. But the stock apears to be less risky and, when comparing its historical volatility, Equinor ASA ADR is 1.02 times less risky than Whitecap Resources. The stock trades about -0.03 of its potential returns per unit of risk. The Whitecap Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 640.00 in Whitecap Resources on August 29, 2024 and sell it today you would earn a total of 83.00 from holding Whitecap Resources or generate 12.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA ADR vs. Whitecap Resources
Performance |
| Timeline |
| Equinor ASA ADR |
| Whitecap Resources |
Equinor ASA and Whitecap Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Whitecap Resources
The main advantage of trading using opposite Equinor ASA and Whitecap Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Whitecap Resources 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 Whitecap Resources will offset losses from the drop in Whitecap Resources' long position.| Equinor ASA vs. Chevron Corp | Equinor ASA vs. Merck Company | Equinor ASA vs. Pharvaris BV | Equinor ASA vs. Brinker International |
| Whitecap Resources vs. Athabasca Oil Corp | Whitecap Resources vs. Headwater Exploration | Whitecap Resources vs. Tamarack Valley Energy | Whitecap Resources vs. Birchcliff Energy |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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