Correlation Between Sparebank and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both Sparebank and Lindsell Train 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 Lindsell Train 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 Lindsell Train Investment, you can compare the effects of market volatilities on Sparebank and Lindsell Train 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 Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Lindsell Train.
Diversification Opportunities for Sparebank and Lindsell Train
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sparebank and Lindsell is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and Lindsell Train Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsell Train Investment 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 Lindsell Train. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsell Train Investment has no effect on the direction of Sparebank i.e., Sparebank and Lindsell Train go up and down completely randomly.
Pair Corralation between Sparebank and Lindsell Train
Assuming the 90 days trading horizon Sparebank 1 SR is expected to generate 0.93 times more return on investment than Lindsell Train. However, Sparebank 1 SR is 1.08 times less risky than Lindsell Train. It trades about 0.06 of its potential returns per unit of risk. Lindsell Train Investment is currently generating about -0.03 per unit of risk. If you would invest 10,255 in Sparebank 1 SR on October 12, 2024 and sell it today you would earn a total of 4,635 from holding Sparebank 1 SR or generate 45.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sparebank 1 SR vs. Lindsell Train Investment
Performance |
| Timeline |
| Sparebank 1 SR |
| Lindsell Train Investment |
Sparebank and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Lindsell Train
The main advantage of trading using opposite Sparebank and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Lindsell Train 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 Lindsell Train will offset losses from the drop in Lindsell Train's long position.| Sparebank vs. Walmart | Sparebank vs. BYD Co | Sparebank vs. Volkswagen AG | Sparebank vs. Volkswagen AG Non Vtg |
| Lindsell Train vs. Cornish Metals | Lindsell Train vs. Discover Financial Services | Lindsell Train vs. UNIQA Insurance Group | Lindsell Train vs. Sparebank 1 SR |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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