Correlation Between Aasen Sparebank and Lea Bank
Can any of the company-specific risk be diversified away by investing in both Aasen Sparebank and Lea 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 Aasen Sparebank and Lea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aasen Sparebank and Lea Bank ASA, you can compare the effects of market volatilities on Aasen Sparebank and Lea 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 Aasen Sparebank with a short position of Lea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aasen Sparebank and Lea Bank.
Diversification Opportunities for Aasen Sparebank and Lea Bank
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aasen and Lea is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aasen Sparebank and Lea Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lea Bank ASA and Aasen 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 Aasen Sparebank are associated (or correlated) with Lea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lea Bank ASA has no effect on the direction of Aasen Sparebank i.e., Aasen Sparebank and Lea Bank go up and down completely randomly.
Pair Corralation between Aasen Sparebank and Lea Bank
Assuming the 90 days trading horizon Aasen Sparebank is expected to generate 1.63 times less return on investment than Lea Bank. But when comparing it to its historical volatility, Aasen Sparebank is 1.41 times less risky than Lea Bank. It trades about 0.03 of its potential returns per unit of risk. Lea Bank ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 831.00 in Lea Bank ASA on August 31, 2024 and sell it today you would earn a total of 139.00 from holding Lea Bank ASA or generate 16.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Aasen Sparebank vs. Lea Bank ASA
Performance |
| Timeline |
| Aasen Sparebank |
| Lea Bank ASA |
Aasen Sparebank and Lea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aasen Sparebank and Lea Bank
The main advantage of trading using opposite Aasen Sparebank and Lea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aasen Sparebank position performs unexpectedly, Lea 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 Lea Bank will offset losses from the drop in Lea Bank's long position.| Aasen Sparebank vs. Sparebank 1 SMN | Aasen Sparebank vs. Sparebank 1 Nord Norge | Aasen Sparebank vs. Sparebanken Vest | Aasen Sparebank vs. Sparebank 1 Ostfold |
| Lea Bank vs. Arcticzymes Technologies ASA | Lea Bank vs. Morrow Bank ASA | Lea Bank vs. Skue Sparebank | Lea Bank vs. Goodtech |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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