Correlation Between Var Energi and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Var Energi 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 Var Energi and Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Var Energi ASA and Equinor ASA, you can compare the effects of market volatilities on Var Energi 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 Var Energi with a short position of Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Var Energi and Equinor ASA.
Diversification Opportunities for Var Energi and Equinor ASA
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Var and Equinor is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA and Var Energi 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 Var Energi ASA 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 Var Energi i.e., Var Energi and Equinor ASA go up and down completely randomly.
Pair Corralation between Var Energi and Equinor ASA
Assuming the 90 days trading horizon Var Energi ASA is expected to generate 1.14 times more return on investment than Equinor ASA. However, Var Energi is 1.14 times more volatile than Equinor ASA. It trades about 0.05 of its potential returns per unit of risk. Equinor ASA is currently generating about 0.01 per unit of risk. If you would invest 2,314 in Var Energi ASA on November 2, 2024 and sell it today you would earn a total of 1,128 from holding Var Energi ASA or generate 48.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Var Energi ASA vs. Equinor ASA
Performance |
| Timeline |
| Var Energi ASA |
| Equinor ASA |
Var Energi and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Var Energi and Equinor ASA
The main advantage of trading using opposite Var Energi and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Var Energi 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.| Var Energi vs. Aker BP ASA | Var Energi vs. Belships | Var Energi vs. MPC Container Ships | Var Energi vs. BW Energy |
| Equinor ASA vs. DnB ASA | Equinor ASA vs. Mowi ASA | Equinor ASA vs. Yara International ASA | Equinor ASA vs. Telenor ASA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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