Correlation Between Royal Bank and Magnora ASA
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Magnora 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 Royal Bank and Magnora ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Bank of and Magnora ASA, you can compare the effects of market volatilities on Royal Bank and Magnora 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 Royal Bank with a short position of Magnora ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Magnora ASA.
Diversification Opportunities for Royal Bank and Magnora ASA
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Royal and Magnora is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA and Royal Bank 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 Royal Bank of are associated (or correlated) with Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of Royal Bank i.e., Royal Bank and Magnora ASA go up and down completely randomly.
Pair Corralation between Royal Bank and Magnora ASA
Assuming the 90 days trading horizon Royal Bank is expected to generate 1.39 times less return on investment than Magnora ASA. But when comparing it to its historical volatility, Royal Bank of is 6.49 times less risky than Magnora ASA. It trades about 0.14 of its potential returns per unit of risk. Magnora ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,613 in Magnora ASA on September 1, 2024 and sell it today you would lose (108.00) from holding Magnora ASA or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Magnora ASA
Performance |
| Timeline |
| Royal Bank |
| Magnora ASA |
Royal Bank and Magnora ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Magnora ASA
The main advantage of trading using opposite Royal Bank and Magnora ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Magnora 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 Magnora ASA will offset losses from the drop in Magnora ASA's long position.| Royal Bank vs. Fevertree Drinks Plc | Royal Bank vs. Bytes Technology | Royal Bank vs. Check Point Software | Royal Bank vs. DXC Technology Co |
| Magnora ASA vs. Uniper SE | Magnora ASA vs. Mulberry Group PLC | Magnora ASA vs. London Security Plc | Magnora ASA vs. Triad Group PLC |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Stocks Directory Find actively traded stocks across global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |