Correlation Between Laredo Oil and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Laredo Oil and Equinor ASA 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 Laredo Oil and Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laredo Oil and Equinor ASA ADR, you can compare the effects of market volatilities on Laredo Oil and Equinor ASA 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 Laredo Oil with a short position of Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laredo Oil and Equinor ASA.
Diversification Opportunities for Laredo Oil and Equinor ASA
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Laredo and Equinor is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Laredo Oil and Equinor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA ADR and Laredo Oil 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 Laredo Oil are associated (or correlated) with Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA ADR has no effect on the direction of Laredo Oil i.e., Laredo Oil and Equinor ASA go up and down completely randomly.
Pair Corralation between Laredo Oil and Equinor ASA
Given the investment horizon of 90 days Laredo Oil is expected to generate 6.18 times more return on investment than Equinor ASA. However, Laredo Oil is 6.18 times more volatile than Equinor ASA ADR. It trades about 0.09 of its potential returns per unit of risk. Equinor ASA ADR is currently generating about 0.01 per unit of risk. If you would invest 9.00 in Laredo Oil on September 2, 2024 and sell it today you would earn a total of 35.00 from holding Laredo Oil or generate 388.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laredo Oil vs. Equinor ASA ADR
Performance |
| Timeline |
| Laredo Oil |
| Equinor ASA ADR |
Laredo Oil and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laredo Oil and Equinor ASA
The main advantage of trading using opposite Laredo Oil and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laredo Oil position performs unexpectedly, Equinor ASA 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.| Laredo Oil vs. Freehold Royalties | Laredo Oil vs. Capricorn Energy PLC | Laredo Oil vs. PrairieSky Royalty | Laredo Oil vs. Tamarack Valley Energy |
| Equinor ASA vs. Shell PLC ADR | Equinor ASA vs. BP PLC ADR | Equinor ASA vs. Eni SpA ADR | Equinor ASA vs. Galp Energa |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |