Correlation Between Eidesvik Offshore and Romsdal Sparebank
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and Romsdal 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 Eidesvik Offshore and Romsdal Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eidesvik Offshore ASA and Romsdal Sparebank, you can compare the effects of market volatilities on Eidesvik Offshore and Romsdal 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 Eidesvik Offshore with a short position of Romsdal Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and Romsdal Sparebank.
Diversification Opportunities for Eidesvik Offshore and Romsdal Sparebank
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eidesvik and Romsdal is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Romsdal Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romsdal Sparebank and Eidesvik Offshore 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 Eidesvik Offshore ASA are associated (or correlated) with Romsdal Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romsdal Sparebank has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Romsdal Sparebank go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and Romsdal Sparebank
Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the Romsdal Sparebank. In addition to that, Eidesvik Offshore is 3.18 times more volatile than Romsdal Sparebank. It trades about -0.03 of its total potential returns per unit of risk. Romsdal Sparebank is currently generating about 0.1 per unit of volatility. If you would invest 10,900 in Romsdal Sparebank on September 3, 2024 and sell it today you would earn a total of 1,200 from holding Romsdal Sparebank or generate 11.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. Romsdal Sparebank
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| Romsdal Sparebank |
Eidesvik Offshore and Romsdal Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and Romsdal Sparebank
The main advantage of trading using opposite Eidesvik Offshore and Romsdal Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, Romsdal 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 Romsdal Sparebank will offset losses from the drop in Romsdal Sparebank's long position.| Eidesvik Offshore vs. BW Energy | Eidesvik Offshore vs. Subsea 7 SA | Eidesvik Offshore vs. BW LPG | Eidesvik Offshore vs. Dno ASA |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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