Correlation Between Equinor ASA and Repsol SA
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Repsol SA 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 Repsol SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA and Repsol SA, you can compare the effects of market volatilities on Equinor ASA and Repsol SA 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 Repsol SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Repsol SA.
Diversification Opportunities for Equinor ASA and Repsol SA
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Equinor and Repsol is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and Repsol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol SA 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 are associated (or correlated) with Repsol SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol SA has no effect on the direction of Equinor ASA i.e., Equinor ASA and Repsol SA go up and down completely randomly.
Pair Corralation between Equinor ASA and Repsol SA
If you would invest 2,352 in Equinor ASA on August 28, 2024 and sell it today you would earn a total of 133.00 from holding Equinor ASA or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Equinor ASA vs. Repsol SA
Performance |
| Timeline |
| Equinor ASA |
| Repsol SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Equinor ASA and Repsol SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Repsol SA
The main advantage of trading using opposite Equinor ASA and Repsol SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Repsol SA 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 Repsol SA will offset losses from the drop in Repsol SA's long position.| Equinor ASA vs. China Petroleum Chemical | Equinor ASA vs. Galp Energa | Equinor ASA vs. Exxon Mobil Corp | Equinor ASA vs. MOL PLC ADR |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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