Correlation Between Equinor ASA and BlueNord ASA

Can any of the company-specific risk be diversified away by investing in both Equinor ASA and BlueNord 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 Equinor ASA and BlueNord ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Equinor ASA and BlueNord ASA, you can compare the effects of market volatilities on Equinor ASA and BlueNord 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 Equinor ASA with a short position of BlueNord ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and BlueNord ASA.

Diversification Opportunities for Equinor ASA and BlueNord ASA

0.18

Correlation Coefficient

Equinor ASA  BlueNord ASA

Average diversification

The 3 months correlation between Equinor and BlueNord is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and BlueNord ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueNord ASA and Equinor ASA 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 Equinor ASA are associated (or correlated) with BlueNord ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueNord ASA has no effect on the direction of Equinor ASA i.e., Equinor ASA and BlueNord ASA go up and down completely randomly.

Pair Corralation between Equinor ASA and BlueNord ASA

Assuming the 90 days trading horizon Equinor ASA is expected to under-perform the BlueNord ASA. But the stock apears to be less risky and, when comparing its historical volatility, Equinor ASA is 1.07 times less risky than BlueNord ASA. The stock trades about -0.02 of its potential returns per unit of risk. The BlueNord ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  48,600  in BlueNord ASA on September 12, 2024 and sell it today you would earn a total of  10,000  from holding BlueNord ASA or generate 20.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Equinor ASA  vs.  BlueNord ASA

Equinor ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equinor ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Equinor ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

BlueNord ASA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlueNord ASA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, BlueNord ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equinor ASA and BlueNord ASA

The main advantage of trading using opposite Equinor ASA and BlueNord ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, BlueNord 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 BlueNord ASA will offset losses from the drop in BlueNord ASA's long position.

The idea behind Equinor ASA and BlueNord 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.