Correlation Between SpareBank and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both SpareBank and WisdomTree Investments 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 SpareBank and WisdomTree Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SpareBank 1 SR Bank and WisdomTree Investments, you can compare the effects of market volatilities on SpareBank and WisdomTree Investments 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 SpareBank with a short position of WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of SpareBank and WisdomTree Investments.
Diversification Opportunities for SpareBank and WisdomTree Investments
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between SpareBank and WisdomTree is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SpareBank 1 SR Bank and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments and SpareBank 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 SpareBank 1 SR Bank are associated (or correlated) with WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of SpareBank i.e., SpareBank and WisdomTree Investments go up and down completely randomly.
Pair Corralation between SpareBank and WisdomTree Investments
Assuming the 90 days trading horizon SpareBank 1 SR Bank is expected to generate 3.65 times more return on investment than WisdomTree Investments. However, SpareBank is 3.65 times more volatile than WisdomTree Investments. It trades about 0.03 of its potential returns per unit of risk. WisdomTree Investments is currently generating about 0.04 per unit of risk. If you would invest 1,044 in SpareBank 1 SR Bank on January 20, 2025 and sell it today you would earn a total of 284.00 from holding SpareBank 1 SR Bank or generate 27.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SpareBank 1 SR Bank vs. WisdomTree Investments
Performance |
| Timeline |
| SpareBank 1 SR |
| WisdomTree Investments |
SpareBank and WisdomTree Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SpareBank and WisdomTree Investments
The main advantage of trading using opposite SpareBank and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SpareBank position performs unexpectedly, WisdomTree Investments 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 WisdomTree Investments will offset losses from the drop in WisdomTree Investments' long position.| SpareBank vs. Tower One Wireless | SpareBank vs. Charter Communications | SpareBank vs. T MOBILE US | SpareBank vs. TRADEGATE |
| WisdomTree Investments vs. EAT WELL INVESTMENT | WisdomTree Investments vs. CN DATANG C | WisdomTree Investments vs. Yunnan Water Investment | WisdomTree Investments vs. Guangdong Investment Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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