Correlation Between Arion Banki and Avanza Bank
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By analyzing existing cross correlation between Arion banki hf and Avanza Bank Holding, you can compare the effects of market volatilities on Arion Banki and Avanza 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 Arion Banki with a short position of Avanza Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arion Banki and Avanza Bank.
Diversification Opportunities for Arion Banki and Avanza Bank
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arion and Avanza is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and Avanza Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanza Bank Holding and Arion Banki 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 Arion banki hf are associated (or correlated) with Avanza Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanza Bank Holding has no effect on the direction of Arion Banki i.e., Arion Banki and Avanza Bank go up and down completely randomly.
Pair Corralation between Arion Banki and Avanza Bank
Assuming the 90 days trading horizon Arion banki hf is expected to generate 0.88 times more return on investment than Avanza Bank. However, Arion banki hf is 1.14 times less risky than Avanza Bank. It trades about 0.01 of its potential returns per unit of risk. Avanza Bank Holding is currently generating about 0.01 per unit of risk. If you would invest 1,188 in Arion banki hf on August 27, 2024 and sell it today you would earn a total of 12.00 from holding Arion banki hf or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arion banki hf vs. Avanza Bank Holding
Performance |
| Timeline |
| Arion banki hf |
| Avanza Bank Holding |
Arion Banki and Avanza Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arion Banki and Avanza Bank
The main advantage of trading using opposite Arion Banki and Avanza Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arion Banki position performs unexpectedly, Avanza 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 Avanza Bank will offset losses from the drop in Avanza Bank's long position.The idea behind Arion banki hf and Avanza Bank Holding 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.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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