Correlation Between Arion Banki and Festi Hf
Can any of the company-specific risk be diversified away by investing in both Arion Banki and Festi Hf 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 Arion Banki and Festi Hf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arion banki hf and Festi hf, you can compare the effects of market volatilities on Arion Banki and Festi Hf 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 Festi Hf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arion Banki and Festi Hf.
Diversification Opportunities for Arion Banki and Festi Hf
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arion and Festi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and Festi hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Festi hf 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 Festi Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Festi hf has no effect on the direction of Arion Banki i.e., Arion Banki and Festi Hf go up and down completely randomly.
Pair Corralation between Arion Banki and Festi Hf
Assuming the 90 days trading horizon Arion Banki is expected to generate 13.28 times less return on investment than Festi Hf. But when comparing it to its historical volatility, Arion banki hf is 1.82 times less risky than Festi Hf. It trades about 0.05 of its potential returns per unit of risk. Festi hf is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 23,100 in Festi hf on August 28, 2024 and sell it today you would earn a total of 4,700 from holding Festi hf or generate 20.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arion banki hf vs. Festi hf
Performance |
| Timeline |
| Arion banki hf |
| Festi hf |
Arion Banki and Festi Hf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arion Banki and Festi Hf
The main advantage of trading using opposite Arion Banki and Festi Hf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arion Banki position performs unexpectedly, Festi Hf 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 Festi Hf will offset losses from the drop in Festi Hf's long position.| Arion Banki vs. slandsbanki hf | Arion Banki vs. Kvika banki hf | Arion Banki vs. Alvotech | Arion Banki vs. Iceland Seafood International |
| Festi Hf vs. Icelandair Group hf | Festi Hf vs. slandsbanki hf | Festi Hf vs. Iceland Seafood International | Festi Hf vs. Alvotech |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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