Correlation Between Belships and Sparebanken Vest
Can any of the company-specific risk be diversified away by investing in both Belships and Sparebanken Vest 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 Belships and Sparebanken Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Belships and Sparebanken Vest, you can compare the effects of market volatilities on Belships and Sparebanken Vest 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 Belships with a short position of Sparebanken Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belships and Sparebanken Vest.
Diversification Opportunities for Belships and Sparebanken Vest
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Belships and Sparebanken is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Belships and Sparebanken Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Vest and Belships 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 Belships are associated (or correlated) with Sparebanken Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Vest has no effect on the direction of Belships i.e., Belships and Sparebanken Vest go up and down completely randomly.
Pair Corralation between Belships and Sparebanken Vest
Assuming the 90 days trading horizon Belships is expected to generate 1.77 times more return on investment than Sparebanken Vest. However, Belships is 1.77 times more volatile than Sparebanken Vest. It trades about 0.09 of its potential returns per unit of risk. Sparebanken Vest is currently generating about -0.1 per unit of risk. If you would invest 1,742 in Belships on August 31, 2024 and sell it today you would earn a total of 78.00 from holding Belships or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Belships vs. Sparebanken Vest
Performance |
| Timeline |
| Belships |
| Sparebanken Vest |
Belships and Sparebanken Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Belships and Sparebanken Vest
The main advantage of trading using opposite Belships and Sparebanken Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Belships position performs unexpectedly, Sparebanken Vest 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 Sparebanken Vest will offset losses from the drop in Sparebanken Vest's long position.| Belships vs. Havila Shipping ASA | Belships vs. Shelf Drilling | Belships vs. Solstad Offsho | Belships vs. Eidesvik Offshore ASA |
| Sparebanken Vest vs. Sparebank 1 SMN | Sparebanken Vest vs. Sparebank 1 Nord Norge | Sparebanken Vest vs. Storebrand ASA | Sparebanken Vest vs. Pareto Bank ASA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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