Correlation Between Sparebank and TBC Bank
Can any of the company-specific risk be diversified away by investing in both Sparebank and TBC Bank 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 TBC Bank 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 TBC Bank Group, you can compare the effects of market volatilities on Sparebank and TBC Bank 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 TBC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and TBC Bank.
Diversification Opportunities for Sparebank and TBC Bank
Very weak diversification
The 3 months correlation between Sparebank and TBC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and TBC Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBC Bank Group 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 TBC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBC Bank Group has no effect on the direction of Sparebank i.e., Sparebank and TBC Bank go up and down completely randomly.
Pair Corralation between Sparebank and TBC Bank
Assuming the 90 days trading horizon Sparebank is expected to generate 1.03 times less return on investment than TBC Bank. But when comparing it to its historical volatility, Sparebank 1 SR is 2.23 times less risky than TBC Bank. It trades about 0.08 of its potential returns per unit of risk. TBC Bank Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 247,354 in TBC Bank Group on October 16, 2024 and sell it today you would earn a total of 50,146 from holding TBC Bank Group or generate 20.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.68% |
| Values | Daily Returns |
Sparebank 1 SR vs. TBC Bank Group
Performance |
| Timeline |
| Sparebank 1 SR |
| TBC Bank Group |
Sparebank and TBC Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and TBC Bank
The main advantage of trading using opposite Sparebank and TBC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, TBC Bank 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 TBC Bank will offset losses from the drop in TBC Bank's long position.| Sparebank vs. Thor Mining PLC | Sparebank vs. AcadeMedia AB | Sparebank vs. Centaur Media | Sparebank vs. First Class Metals |
| TBC Bank vs. Taiwan Semiconductor Manufacturing | TBC Bank vs. Symphony Environmental Technologies | TBC Bank vs. Advanced Medical Solutions | TBC Bank vs. InterContinental Hotels 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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