Correlation Between Arion Banki and Sn Hf
Can any of the company-specific risk be diversified away by investing in both Arion Banki and Sn 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 Sn 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 Sn hf, you can compare the effects of market volatilities on Arion Banki and Sn 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 Sn Hf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arion Banki and Sn Hf.
Diversification Opportunities for Arion Banki and Sn Hf
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Arion and SYN is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and Sn hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sn 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 Sn Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sn hf has no effect on the direction of Arion Banki i.e., Arion Banki and Sn Hf go up and down completely randomly.
Pair Corralation between Arion Banki and Sn Hf
Assuming the 90 days trading horizon Arion banki hf is expected to under-perform the Sn Hf. But the stock apears to be less risky and, when comparing its historical volatility, Arion banki hf is 1.95 times less risky than Sn Hf. The stock trades about -0.03 of its potential returns per unit of risk. The Sn hf is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,020 in Sn hf on September 1, 2024 and sell it today you would earn a total of 280.00 from holding Sn hf or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Arion banki hf vs. Sn hf
Performance |
| Timeline |
| Arion banki hf |
| Sn hf |
Arion Banki and Sn Hf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arion Banki and Sn Hf
The main advantage of trading using opposite Arion Banki and Sn Hf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arion Banki position performs unexpectedly, Sn 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 Sn Hf will offset losses from the drop in Sn Hf's long position.| Arion Banki vs. slandsbanki hf | Arion Banki vs. Icelandair Group hf | Arion Banki vs. Marel hf | Arion Banki vs. Kvika banki 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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