Correlation Between Sparebank and Mineral Financial
Can any of the company-specific risk be diversified away by investing in both Sparebank and Mineral Financial 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 Mineral Financial 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 Mineral Financial Investments, you can compare the effects of market volatilities on Sparebank and Mineral Financial 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 Mineral Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Mineral Financial.
Diversification Opportunities for Sparebank and Mineral Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sparebank and Mineral is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and Mineral Financial Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Financial 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 Mineral Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Financial has no effect on the direction of Sparebank i.e., Sparebank and Mineral Financial go up and down completely randomly.
Pair Corralation between Sparebank and Mineral Financial
Assuming the 90 days trading horizon Sparebank is expected to generate 2.01 times less return on investment than Mineral Financial. But when comparing it to its historical volatility, Sparebank 1 SR is 2.53 times less risky than Mineral Financial. It trades about 0.39 of its potential returns per unit of risk. Mineral Financial Investments is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,275 in Mineral Financial Investments on November 7, 2024 and sell it today you would earn a total of 200.00 from holding Mineral Financial Investments or generate 15.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sparebank 1 SR vs. Mineral Financial Investments
Performance |
| Timeline |
| Sparebank 1 SR |
| Mineral Financial |
Sparebank and Mineral Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Mineral Financial
The main advantage of trading using opposite Sparebank and Mineral Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Mineral Financial 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 Mineral Financial will offset losses from the drop in Mineral Financial's long position.| Sparebank vs. European Metals Holdings | Sparebank vs. Zoom Video Communications | Sparebank vs. Eastinco Mining Exploration | Sparebank vs. Bloomsbury Publishing Plc |
| Mineral Financial vs. Arrow Electronics | Mineral Financial vs. Waste Management | Mineral Financial vs. Gaming Realms plc | Mineral Financial vs. Auto Trader Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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