Correlation Between Aasen Sparebank and Melhus Sparebank
Can any of the company-specific risk be diversified away by investing in both Aasen Sparebank and Melhus 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 Aasen Sparebank and Melhus Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aasen Sparebank and Melhus Sparebank, you can compare the effects of market volatilities on Aasen Sparebank and Melhus 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 Aasen Sparebank with a short position of Melhus Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aasen Sparebank and Melhus Sparebank.
Diversification Opportunities for Aasen Sparebank and Melhus Sparebank
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aasen and Melhus is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aasen Sparebank and Melhus Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melhus Sparebank 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 Melhus Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melhus Sparebank has no effect on the direction of Aasen Sparebank i.e., Aasen Sparebank and Melhus Sparebank go up and down completely randomly.
Pair Corralation between Aasen Sparebank and Melhus Sparebank
Assuming the 90 days trading horizon Aasen Sparebank is expected to generate 8.1 times less return on investment than Melhus Sparebank. In addition to that, Aasen Sparebank is 1.36 times more volatile than Melhus Sparebank. It trades about 0.01 of its total potential returns per unit of risk. Melhus Sparebank is currently generating about 0.14 per unit of volatility. If you would invest 16,460 in Melhus Sparebank on November 30, 2024 and sell it today you would earn a total of 1,038 from holding Melhus Sparebank or generate 6.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aasen Sparebank vs. Melhus Sparebank
Performance |
| Timeline |
| Aasen Sparebank |
| Melhus Sparebank |
Aasen Sparebank and Melhus Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aasen Sparebank and Melhus Sparebank
The main advantage of trading using opposite Aasen Sparebank and Melhus Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aasen Sparebank position performs unexpectedly, Melhus 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 Melhus Sparebank will offset losses from the drop in Melhus Sparebank's long position.| Aasen Sparebank vs. Grong Sparebank | Aasen Sparebank vs. Melhus Sparebank | Aasen Sparebank vs. Aurskog Sparebank | Aasen Sparebank vs. Sparebanken Ost |
| Melhus Sparebank vs. Sparebank 1 Nord Norge | Melhus Sparebank vs. Aurskog Sparebank | Melhus Sparebank vs. Helgeland Sparebank |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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