Correlation Between LIFE + and ROMERIKE SPAREBANK
Can any of the company-specific risk be diversified away by investing in both LIFE + and ROMERIKE 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 LIFE + and ROMERIKE SPAREBANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFE BANC SPLIT and ROMERIKE SPAREBANK NK, you can compare the effects of market volatilities on LIFE + and ROMERIKE 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 LIFE + with a short position of ROMERIKE SPAREBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE + and ROMERIKE SPAREBANK.
Diversification Opportunities for LIFE + and ROMERIKE SPAREBANK
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LIFE and ROMERIKE is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding LIFE BANC SPLIT and ROMERIKE SPAREBANK NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROMERIKE SPAREBANK and LIFE + 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 LIFE BANC SPLIT are associated (or correlated) with ROMERIKE SPAREBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROMERIKE SPAREBANK has no effect on the direction of LIFE + i.e., LIFE + and ROMERIKE SPAREBANK go up and down completely randomly.
Pair Corralation between LIFE + and ROMERIKE SPAREBANK
Assuming the 90 days horizon LIFE BANC SPLIT is expected to generate 2.73 times more return on investment than ROMERIKE SPAREBANK. However, LIFE + is 2.73 times more volatile than ROMERIKE SPAREBANK NK. It trades about 0.25 of its potential returns per unit of risk. ROMERIKE SPAREBANK NK is currently generating about 0.23 per unit of risk. If you would invest 550.00 in LIFE BANC SPLIT on August 25, 2024 and sell it today you would earn a total of 80.00 from holding LIFE BANC SPLIT or generate 14.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFE BANC SPLIT vs. ROMERIKE SPAREBANK NK
Performance |
| Timeline |
| LIFE BANC SPLIT |
| ROMERIKE SPAREBANK |
LIFE + and ROMERIKE SPAREBANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFE + and ROMERIKE SPAREBANK
The main advantage of trading using opposite LIFE + and ROMERIKE SPAREBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFE + position performs unexpectedly, ROMERIKE 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 ROMERIKE SPAREBANK will offset losses from the drop in ROMERIKE SPAREBANK's long position.The idea behind LIFE BANC SPLIT and ROMERIKE SPAREBANK NK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ROMERIKE SPAREBANK vs. Postal Savings Bank | ROMERIKE SPAREBANK vs. Deutsche Bank Aktiengesellschaft | ROMERIKE SPAREBANK vs. Superior Plus Corp | ROMERIKE SPAREBANK vs. NMI Holdings |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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