Correlation Between Aker BP and Sparebanken Sor
Can any of the company-specific risk be diversified away by investing in both Aker BP and Sparebanken Sor 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 Aker BP and Sparebanken Sor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker BP ASA and Sparebanken Sor, you can compare the effects of market volatilities on Aker BP and Sparebanken Sor 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 Aker BP with a short position of Sparebanken Sor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker BP and Sparebanken Sor.
Diversification Opportunities for Aker BP and Sparebanken Sor
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aker and Sparebanken is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aker BP ASA and Sparebanken Sor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Sor and Aker BP 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 Aker BP ASA are associated (or correlated) with Sparebanken Sor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Sor has no effect on the direction of Aker BP i.e., Aker BP and Sparebanken Sor go up and down completely randomly.
Pair Corralation between Aker BP and Sparebanken Sor
Assuming the 90 days trading horizon Aker BP ASA is expected to generate 1.58 times more return on investment than Sparebanken Sor. However, Aker BP is 1.58 times more volatile than Sparebanken Sor. It trades about 0.14 of its potential returns per unit of risk. Sparebanken Sor is currently generating about 0.05 per unit of risk. If you would invest 21,885 in Aker BP ASA on August 28, 2024 and sell it today you would earn a total of 985.00 from holding Aker BP ASA or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker BP ASA vs. Sparebanken Sor
Performance |
| Timeline |
| Aker BP ASA |
| Sparebanken Sor |
Aker BP and Sparebanken Sor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker BP and Sparebanken Sor
The main advantage of trading using opposite Aker BP and Sparebanken Sor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker BP position performs unexpectedly, Sparebanken Sor 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 Sparebanken Sor will offset losses from the drop in Sparebanken Sor's long position.The idea behind Aker BP ASA and Sparebanken Sor 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.| Sparebanken Sor vs. Sparebanken Vest | Sparebanken Sor vs. Sparebank 1 Nord Norge | Sparebanken Sor vs. Sparebank 1 SMN | Sparebanken Sor vs. Sparebanken Ost |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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