Correlation Between SP 500 and EQUINOR ASA

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Can any of the company-specific risk be diversified away by investing in both SP 500 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 SP 500 and EQUINOR ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP 500 Technology and EQUINOR ASA, you can compare the effects of market volatilities on SP 500 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 SP 500 with a short position of EQUINOR ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and EQUINOR ASA.

Diversification Opportunities for SP 500 and EQUINOR ASA

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between SP 500 and EQUINOR is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 Technology and EQUINOR ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQUINOR ASA and SP 500 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 SP 500 Technology 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 SP 500 i.e., SP 500 and EQUINOR ASA go up and down completely randomly.

Pair Corralation between SP 500 and EQUINOR ASA

Considering the 90-day investment horizon SP 500 Technology is expected to generate 0.8 times more return on investment than EQUINOR ASA. However, SP 500 Technology is 1.24 times less risky than EQUINOR ASA. It trades about -0.1 of its potential returns per unit of risk. EQUINOR ASA is currently generating about -0.17 per unit of risk. If you would invest  14,009  in SP 500 Technology on March 29, 2022 and sell it today you would lose (679.00)  from holding SP 500 Technology or give up 4.85% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.0%
ValuesDaily Returns

SP 500 Technology  vs.  EQUINOR ASA

 Performance (%) 
      Timeline 
SP 500 Technology 
SP 500 Performance
0 of 100
Over the last 90 days SP 500 Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Etf's essential indicators remain fairly strong which may send shares a bit higher in July 2022. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

SP 500 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

SP 500 and EQUINOR ASA Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with SP 500 and EQUINOR ASA

The main advantage of trading using opposite SP 500 and EQUINOR ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 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.

SP 500 Technology

Pair trading matchups for SP 500

The idea behind SP 500 Technology 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.
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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