Correlation Between Pacific Energy and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Pacific Energy 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 Pacific Energy and Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Energy Mining and Equinor ASA ADR, you can compare the effects of market volatilities on Pacific Energy 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 Pacific Energy with a short position of Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Energy and Equinor ASA.
Diversification Opportunities for Pacific Energy and Equinor ASA
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pacific and Equinor is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Energy Mining 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 Pacific Energy 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 Pacific Energy Mining 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 Pacific Energy i.e., Pacific Energy and Equinor ASA go up and down completely randomly.
Pair Corralation between Pacific Energy and Equinor ASA
If you would invest 2,272 in Equinor ASA ADR on September 2, 2024 and sell it today you would earn a total of 146.00 from holding Equinor ASA ADR or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pacific Energy Mining vs. Equinor ASA ADR
Performance |
| Timeline |
| Pacific Energy Mining |
| Equinor ASA ADR |
Pacific Energy and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Energy and Equinor ASA
The main advantage of trading using opposite Pacific Energy and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Energy 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.| Pacific Energy vs. Equinor ASA ADR | Pacific Energy vs. TotalEnergies SE ADR | Pacific Energy vs. Ecopetrol SA ADR | Pacific Energy vs. National Fuel Gas |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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