Correlation Between AcadeMedia and Sparebank
Can any of the company-specific risk be diversified away by investing in both AcadeMedia and Sparebank 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 AcadeMedia and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AcadeMedia AB and Sparebank 1 SR, you can compare the effects of market volatilities on AcadeMedia and Sparebank 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 AcadeMedia with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of AcadeMedia and Sparebank.
Diversification Opportunities for AcadeMedia and Sparebank
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AcadeMedia and Sparebank is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AcadeMedia AB and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR and AcadeMedia 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 AcadeMedia AB are associated (or correlated) with Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of AcadeMedia i.e., AcadeMedia and Sparebank go up and down completely randomly.
Pair Corralation between AcadeMedia and Sparebank
Assuming the 90 days trading horizon AcadeMedia AB is expected to generate 1.58 times more return on investment than Sparebank. However, AcadeMedia is 1.58 times more volatile than Sparebank 1 SR. It trades about 0.22 of its potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.21 per unit of risk. If you would invest 6,000 in AcadeMedia AB on October 30, 2024 and sell it today you would earn a total of 765.00 from holding AcadeMedia AB or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AcadeMedia AB vs. Sparebank 1 SR
Performance |
| Timeline |
| AcadeMedia AB |
| Sparebank 1 SR |
AcadeMedia and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AcadeMedia and Sparebank
The main advantage of trading using opposite AcadeMedia and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AcadeMedia position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.| AcadeMedia vs. National Beverage Corp | AcadeMedia vs. Tyson Foods Cl | AcadeMedia vs. Monster Beverage Corp | AcadeMedia vs. Aeorema Communications Plc |
| Sparebank vs. Wheaton Precious Metals | Sparebank vs. Indutrade AB | Sparebank vs. Fulcrum Metals PLC | Sparebank vs. Flow Traders NV |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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