Correlation Between Empire Petroleum and Equinor ASA

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

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

Diversification Opportunities for Empire Petroleum and Equinor ASA

-0.01

Correlation Coefficient

Empire Petroleum  Equinor ASA

Good diversification

The 3 months correlation between Empire and Equinor is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Empire Petroleum 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 Empire Petroleum 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 Empire Petroleum Corp 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 Empire Petroleum i.e., Empire Petroleum and Equinor ASA go up and down completely randomly.

Pair Corralation between Empire Petroleum and Equinor ASA

Allowing for the 90-day total investment horizon Empire Petroleum Corp is expected to under-perform the Equinor ASA. In addition to that, Empire Petroleum is 1.94 times more volatile than Equinor ASA ADR. It trades about -0.06 of its total potential returns per unit of risk. Equinor ASA ADR is currently generating about 0.11 per unit of volatility. If you would invest  2,297  in Equinor ASA ADR on December 28, 2024 and sell it today you would earn a total of  306.00  from holding Equinor ASA ADR or generate 13.32% return on investment over 90 days.

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

Empire Petroleum Corp  vs.  Equinor ASA ADR

Empire Petroleum Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empire Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Equinor ASA ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equinor ASA ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Equinor ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Empire Petroleum and Equinor ASA

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

The idea behind Empire Petroleum Corp and Equinor ASA ADR 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.