Correlation Between Beerenberg and SpareBank
Can any of the company-specific risk be diversified away by investing in both Beerenberg and SpareBank 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 Beerenberg and SpareBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beerenberg AS and SpareBank 1 stlandet, you can compare the effects of market volatilities on Beerenberg and SpareBank 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 Beerenberg with a short position of SpareBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beerenberg and SpareBank.
Diversification Opportunities for Beerenberg and SpareBank
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beerenberg and SpareBank is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Beerenberg AS and SpareBank 1 stlandet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpareBank 1 stlandet and Beerenberg 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 Beerenberg AS are associated (or correlated) with SpareBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpareBank 1 stlandet has no effect on the direction of Beerenberg i.e., Beerenberg and SpareBank go up and down completely randomly.
Pair Corralation between Beerenberg and SpareBank
Assuming the 90 days trading horizon Beerenberg AS is expected to generate 0.17 times more return on investment than SpareBank. However, Beerenberg AS is 5.74 times less risky than SpareBank. It trades about -0.12 of its potential returns per unit of risk. SpareBank 1 stlandet is currently generating about -0.12 per unit of risk. If you would invest 4,130 in Beerenberg AS on September 1, 2024 and sell it today you would lose (30.00) from holding Beerenberg AS or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beerenberg AS vs. SpareBank 1 stlandet
Performance |
| Timeline |
| Beerenberg AS |
| SpareBank 1 stlandet |
Beerenberg and SpareBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beerenberg and SpareBank
The main advantage of trading using opposite Beerenberg and SpareBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beerenberg position performs unexpectedly, SpareBank 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 SpareBank will offset losses from the drop in SpareBank's long position.| Beerenberg vs. Sparebanken Ost | Beerenberg vs. Skue Sparebank | Beerenberg vs. Polaris Media | Beerenberg vs. Clean Seas Seafood |
| SpareBank vs. Sparebank 1 SMN | SpareBank vs. Sparebank 1 Nord Norge | SpareBank vs. Sparebanken Vest | SpareBank vs. Sparebank 1 SR |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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