Correlation Between Unit and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Unit 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 Unit and Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unit Corporation and Equinor ASA ADR, you can compare the effects of market volatilities on Unit 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 Unit with a short position of Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unit and Equinor ASA.
Diversification Opportunities for Unit and Equinor ASA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Unit and Equinor is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Unit 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 Unit 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 Unit Corporation 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 Unit i.e., Unit and Equinor ASA go up and down completely randomly.
Pair Corralation between Unit and Equinor ASA
Given the investment horizon of 90 days Unit Corporation is expected to under-perform the Equinor ASA. In addition to that, Unit is 1.32 times more volatile than Equinor ASA ADR. It trades about -0.12 of its total potential returns per unit of risk. Equinor ASA ADR is currently generating about 0.14 per unit of volatility. If you would invest 2,291 in Equinor ASA ADR on September 1, 2024 and sell it today you would earn a total of 127.00 from holding Equinor ASA ADR or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unit Corp. vs. Equinor ASA ADR
Performance |
| Timeline |
| Unit |
| Equinor ASA ADR |
Unit and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unit and Equinor ASA
The main advantage of trading using opposite Unit and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unit 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.| Unit vs. Equinor ASA ADR | Unit vs. TotalEnergies SE ADR | Unit vs. Ecopetrol SA ADR | Unit 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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