Correlation Between Arion Banki and ISFELAG HF
Can any of the company-specific risk be diversified away by investing in both Arion Banki and ISFELAG 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 ISFELAG 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 ISFELAG HF, you can compare the effects of market volatilities on Arion Banki and ISFELAG 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 ISFELAG HF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arion Banki and ISFELAG HF.
Diversification Opportunities for Arion Banki and ISFELAG HF
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Arion and ISFELAG is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and ISFELAG HF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISFELAG 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 ISFELAG HF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISFELAG HF has no effect on the direction of Arion Banki i.e., Arion Banki and ISFELAG HF go up and down completely randomly.
Pair Corralation between Arion Banki and ISFELAG HF
Assuming the 90 days trading horizon Arion banki hf is expected to generate 1.06 times more return on investment than ISFELAG HF. However, Arion Banki is 1.06 times more volatile than ISFELAG HF. It trades about 0.18 of its potential returns per unit of risk. ISFELAG HF is currently generating about -0.04 per unit of risk. If you would invest 13,700 in Arion banki hf on August 28, 2024 and sell it today you would earn a total of 1,950 from holding Arion banki hf or generate 14.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arion banki hf vs. ISFELAG HF
Performance |
| Timeline |
| Arion banki hf |
| ISFELAG HF |
Arion Banki and ISFELAG HF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arion Banki and ISFELAG HF
The main advantage of trading using opposite Arion Banki and ISFELAG HF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arion Banki position performs unexpectedly, ISFELAG 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 ISFELAG HF will offset losses from the drop in ISFELAG 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 |
| ISFELAG HF vs. Alvotech | ISFELAG HF vs. Arion banki hf | ISFELAG HF vs. Icelandair Group hf | ISFELAG HF vs. slandsbanki 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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