Correlation Between Repsol SA and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Repsol SA 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 Repsol SA and Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Repsol SA and Equinor ASA, you can compare the effects of market volatilities on Repsol SA 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 Repsol SA with a short position of Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Repsol SA and Equinor ASA.
Diversification Opportunities for Repsol SA and Equinor ASA
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Repsol and Equinor is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Repsol SA and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA and Repsol SA 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 Repsol SA 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 has no effect on the direction of Repsol SA i.e., Repsol SA and Equinor ASA go up and down completely randomly.
Pair Corralation between Repsol SA and Equinor ASA
If you would invest 2,319 in Equinor ASA on August 24, 2024 and sell it today you would earn a total of 140.00 from holding Equinor ASA or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Repsol SA vs. Equinor ASA
Performance |
| Timeline |
| Repsol SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Equinor ASA |
Repsol SA and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Repsol SA and Equinor ASA
The main advantage of trading using opposite Repsol SA and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Repsol SA 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.The idea behind Repsol SA and Equinor ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Equinor ASA vs. China Petroleum Chemical | Equinor ASA vs. Galp Energa | Equinor ASA vs. Exxon Mobil Corp | Equinor ASA vs. Eni SpA |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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