Correlation Between Tullow Oil and Dno ASA
Can any of the company-specific risk be diversified away by investing in both Tullow Oil and Dno 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 Tullow Oil and Dno ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tullow Oil PLC and Dno ASA, you can compare the effects of market volatilities on Tullow Oil and Dno 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 Tullow Oil with a short position of Dno ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tullow Oil and Dno ASA.
Diversification Opportunities for Tullow Oil and Dno ASA
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tullow and Dno is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tullow Oil PLC and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA and Tullow 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 Tullow Oil PLC are associated (or correlated) with Dno ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dno ASA has no effect on the direction of Tullow Oil i.e., Tullow Oil and Dno ASA go up and down completely randomly.
Pair Corralation between Tullow Oil and Dno ASA
Assuming the 90 days horizon Tullow Oil is expected to generate 24.14 times less return on investment than Dno ASA. But when comparing it to its historical volatility, Tullow Oil PLC is 2.57 times less risky than Dno ASA. It trades about 0.01 of its potential returns per unit of risk. Dno ASA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 119.00 in Dno ASA on August 30, 2024 and sell it today you would lose (29.00) from holding Dno ASA or give up 24.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 72.73% |
| Values | Daily Returns |
Tullow Oil PLC vs. Dno ASA
Performance |
| Timeline |
| Tullow Oil PLC |
| Dno ASA |
Tullow Oil and Dno ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tullow Oil and Dno ASA
The main advantage of trading using opposite Tullow Oil and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tullow Oil position performs unexpectedly, Dno 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 Dno ASA will offset losses from the drop in Dno ASA's long position.| Tullow Oil vs. San Leon Energy | Tullow Oil vs. Dno ASA | Tullow Oil vs. PetroShale | Tullow Oil vs. Horizon Oil Limited |
| Dno ASA vs. PetroShale | Dno ASA vs. Horizon Oil Limited | Dno ASA vs. Enwell Energy plc | Dno ASA vs. Tullow Oil plc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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