Correlation Between ALK Abell and Spar Nord
Can any of the company-specific risk be diversified away by investing in both ALK Abell and Spar Nord 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 ALK Abell and Spar Nord into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALK Abell AS and Spar Nord Bank, you can compare the effects of market volatilities on ALK Abell and Spar Nord 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 ALK Abell with a short position of Spar Nord. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALK Abell and Spar Nord.
Diversification Opportunities for ALK Abell and Spar Nord
Excellent diversification
The 3 months correlation between ALK and Spar is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ALK Abell AS and Spar Nord Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spar Nord Bank and ALK Abell 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 ALK Abell AS are associated (or correlated) with Spar Nord. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spar Nord Bank has no effect on the direction of ALK Abell i.e., ALK Abell and Spar Nord go up and down completely randomly.
Pair Corralation between ALK Abell and Spar Nord
Assuming the 90 days trading horizon ALK Abell AS is expected to under-perform the Spar Nord. In addition to that, ALK Abell is 1.91 times more volatile than Spar Nord Bank. It trades about -0.05 of its total potential returns per unit of risk. Spar Nord Bank is currently generating about -0.07 per unit of volatility. If you would invest 14,000 in Spar Nord Bank on August 25, 2024 and sell it today you would lose (360.00) from holding Spar Nord Bank or give up 2.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ALK Abell AS vs. Spar Nord Bank
Performance |
| Timeline |
| ALK Abell AS |
| Spar Nord Bank |
ALK Abell and Spar Nord Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALK Abell and Spar Nord
The main advantage of trading using opposite ALK Abell and Spar Nord positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALK Abell position performs unexpectedly, Spar Nord 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 Spar Nord will offset losses from the drop in Spar Nord's long position.The idea behind ALK Abell AS and Spar Nord Bank 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.| Spar Nord vs. Dataproces Group AS | Spar Nord vs. cBrain AS | Spar Nord vs. ALK Abell AS | Spar Nord vs. ChemoMetec AS |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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