Correlation Between International Business and EQUINOR ASA

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Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and EQUINOR ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and EQUINOR ASA, you can compare the effects of market volatilities on International Business 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 International Business with a short position of EQUINOR ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and EQUINOR ASA.

Diversification Opportunities for International Business and EQUINOR ASA

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between International and EQUINOR is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and EQUINOR ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQUINOR ASA and International Business 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 International Business Machines 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 International Business i.e., International Business and EQUINOR ASA go up and down completely randomly.

Pair Corralation between International Business and EQUINOR ASA

Considering the 90-day investment horizon International Business is expected to generate 2.92 times less return on investment than EQUINOR ASA. But when comparing it to its historical volatility, International Business Machines is 2.02 times less risky than EQUINOR ASA. It trades about 0.06 of its potential returns per unit of risk. EQUINOR ASA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,536  in EQUINOR ASA on March 28, 2022 and sell it today you would earn a total of  1,839  from holding EQUINOR ASA or generate 119.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

International Business Machine  vs.  EQUINOR ASA

 Performance (%) 
      Timeline 
International Business 
International Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental drivers, International Business may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0465
Payout Ratio
0.68
Last Split Factor
1046:1000
Forward Annual Dividend Rate
6.6
Dividend Date
2022-06-10
Ex Dividend Date
2022-05-09
Last Split Date
2021-11-04

International Price Channel

EQUINOR ASA 
EQUINOR Performance
0 of 100
Over the last 90 days EQUINOR ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, EQUINOR ASA is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0233
Payout Ratio
0.5
Forward Annual Dividend Rate
0.8
Ex Dividend Date
2022-08-11

EQUINOR Price Channel

International Business and EQUINOR ASA Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with International Business and EQUINOR ASA

The main advantage of trading using opposite International Business and EQUINOR ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.

International Business Machines

Pair trading matchups for International Business

The idea behind International Business Machines and EQUINOR ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

EQUINOR ASA

Pair trading matchups for EQUINOR 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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