Correlation Between Tourmaline Oil and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Tourmaline 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 Tourmaline 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 Tourmaline Oil Corp and Equinor ASA ADR, you can compare the effects of market volatilities on Tourmaline 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 Tourmaline Oil with a short position of Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tourmaline Oil and Equinor ASA.
Diversification Opportunities for Tourmaline Oil and Equinor ASA
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tourmaline and Equinor is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Tourmaline Oil Corp 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 Tourmaline 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 Tourmaline Oil Corp 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 Tourmaline Oil i.e., Tourmaline Oil and Equinor ASA go up and down completely randomly.
Pair Corralation between Tourmaline Oil and Equinor ASA
Assuming the 90 days horizon Tourmaline Oil Corp is expected to generate 1.05 times more return on investment than Equinor ASA. However, Tourmaline Oil is 1.05 times more volatile than Equinor ASA ADR. It trades about 0.01 of its potential returns per unit of risk. Equinor ASA ADR is currently generating about -0.02 per unit of risk. If you would invest 4,722 in Tourmaline Oil Corp on September 3, 2024 and sell it today you would lose (60.00) from holding Tourmaline Oil Corp or give up 1.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tourmaline Oil Corp vs. Equinor ASA ADR
Performance |
| Timeline |
| Tourmaline Oil Corp |
| Equinor ASA ADR |
Tourmaline Oil and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tourmaline Oil and Equinor ASA
The main advantage of trading using opposite Tourmaline Oil and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tourmaline 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.| Tourmaline Oil vs. Seadrill Limited | Tourmaline Oil vs. Noble plc | Tourmaline Oil vs. Borr Drilling | Tourmaline Oil vs. SCOR PK |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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