Correlation Between Sparebank and Cembra Money
Can any of the company-specific risk be diversified away by investing in both Sparebank and Cembra Money 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 Sparebank and Cembra Money into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 SR and Cembra Money Bank, you can compare the effects of market volatilities on Sparebank and Cembra Money 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 Sparebank with a short position of Cembra Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Cembra Money.
Diversification Opportunities for Sparebank and Cembra Money
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sparebank and Cembra is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and Cembra Money Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cembra Money Bank and Sparebank 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 Sparebank 1 SR are associated (or correlated) with Cembra Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cembra Money Bank has no effect on the direction of Sparebank i.e., Sparebank and Cembra Money go up and down completely randomly.
Pair Corralation between Sparebank and Cembra Money
Assuming the 90 days trading horizon Sparebank is expected to generate 4.21 times less return on investment than Cembra Money. In addition to that, Sparebank is 2.23 times more volatile than Cembra Money Bank. It trades about 0.05 of its total potential returns per unit of risk. Cembra Money Bank is currently generating about 0.48 per unit of volatility. If you would invest 7,890 in Cembra Money Bank on September 13, 2024 and sell it today you would earn a total of 515.00 from holding Cembra Money Bank or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sparebank 1 SR vs. Cembra Money Bank
Performance |
| Timeline |
| Sparebank 1 SR |
| Cembra Money Bank |
Sparebank and Cembra Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Cembra Money
The main advantage of trading using opposite Sparebank and Cembra Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Cembra Money 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 Cembra Money will offset losses from the drop in Cembra Money's long position.| Sparebank vs. Porvair plc | Sparebank vs. GreenX Metals | Sparebank vs. Morgan Advanced Materials | Sparebank vs. Metals Exploration Plc |
| Cembra Money vs. Samsung Electronics Co | Cembra Money vs. Samsung Electronics Co | Cembra Money vs. Hyundai Motor | Cembra Money vs. Reliance Industries Ltd |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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