Correlation Between Arion Banki and Slandsbanki
Can any of the company-specific risk be diversified away by investing in both Arion Banki and Slandsbanki 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 Slandsbanki 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 slandsbanki hf, you can compare the effects of market volatilities on Arion Banki and Slandsbanki 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 Slandsbanki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arion Banki and Slandsbanki.
Diversification Opportunities for Arion Banki and Slandsbanki
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Arion and Slandsbanki is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and slandsbanki hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on slandsbanki 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 Slandsbanki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of slandsbanki hf has no effect on the direction of Arion Banki i.e., Arion Banki and Slandsbanki go up and down completely randomly.
Pair Corralation between Arion Banki and Slandsbanki
Assuming the 90 days trading horizon Arion banki hf is expected to generate 1.54 times more return on investment than Slandsbanki. However, Arion Banki is 1.54 times more volatile than slandsbanki hf. It trades about 0.05 of its potential returns per unit of risk. slandsbanki hf is currently generating about -0.09 per unit of risk. If you would invest 15,450 in Arion banki hf on August 28, 2024 and sell it today you would earn a total of 200.00 from holding Arion banki hf or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arion banki hf vs. slandsbanki hf
Performance |
| Timeline |
| Arion banki hf |
| slandsbanki hf |
Arion Banki and Slandsbanki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arion Banki and Slandsbanki
The main advantage of trading using opposite Arion Banki and Slandsbanki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arion Banki position performs unexpectedly, Slandsbanki 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 Slandsbanki will offset losses from the drop in Slandsbanki's long position.| Arion Banki vs. slandsbanki hf | Arion Banki vs. Kvika banki hf | Arion Banki vs. Alvotech | Arion Banki vs. Iceland Seafood International |
| Slandsbanki vs. Icelandair Group hf | Slandsbanki vs. Arion banki hf | Slandsbanki vs. Kvika banki hf | Slandsbanki vs. Marel hf |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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