Correlation Between Diversified Energy and Sparebank
Can any of the company-specific risk be diversified away by investing in both Diversified Energy 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 Diversified Energy and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Energy and Sparebank 1 SR, you can compare the effects of market volatilities on Diversified Energy 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 Diversified Energy with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Energy and Sparebank.
Diversification Opportunities for Diversified Energy and Sparebank
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diversified and Sparebank is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Energy and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR and Diversified Energy 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 Diversified Energy 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 SR has no effect on the direction of Diversified Energy i.e., Diversified Energy and Sparebank go up and down completely randomly.
Pair Corralation between Diversified Energy and Sparebank
Assuming the 90 days trading horizon Diversified Energy is expected to under-perform the Sparebank. In addition to that, Diversified Energy is 2.75 times more volatile than Sparebank 1 SR. It trades about -0.03 of its total potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.06 per unit of volatility. If you would invest 12,159 in Sparebank 1 SR on September 12, 2024 and sell it today you would earn a total of 2,441 from holding Sparebank 1 SR or generate 20.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Diversified Energy vs. Sparebank 1 SR
Performance |
| Timeline |
| Diversified Energy |
| Sparebank 1 SR |
Diversified Energy and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Energy and Sparebank
The main advantage of trading using opposite Diversified Energy and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Energy 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.| Diversified Energy vs. Zoom Video Communications | Diversified Energy vs. Neometals | Diversified Energy vs. Coor Service Management | Diversified Energy vs. Fidelity Sustainable USD |
| Sparebank vs. Aeorema Communications Plc | Sparebank vs. Premier Foods PLC | Sparebank vs. Aurora Investment Trust | Sparebank vs. Diversified Energy |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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