Correlation Between Grong Sparebank and Aurskog Sparebank
Can any of the company-specific risk be diversified away by investing in both Grong Sparebank and Aurskog 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 Grong Sparebank and Aurskog Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grong Sparebank and Aurskog Sparebank, you can compare the effects of market volatilities on Grong Sparebank and Aurskog 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 Grong Sparebank with a short position of Aurskog Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grong Sparebank and Aurskog Sparebank.
Diversification Opportunities for Grong Sparebank and Aurskog Sparebank
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grong and Aurskog is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Grong Sparebank and Aurskog Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurskog Sparebank and Grong 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 Grong Sparebank are associated (or correlated) with Aurskog Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurskog Sparebank has no effect on the direction of Grong Sparebank i.e., Grong Sparebank and Aurskog Sparebank go up and down completely randomly.
Pair Corralation between Grong Sparebank and Aurskog Sparebank
Assuming the 90 days trading horizon Grong Sparebank is expected to generate 1.97 times less return on investment than Aurskog Sparebank. But when comparing it to its historical volatility, Grong Sparebank is 1.34 times less risky than Aurskog Sparebank. It trades about 0.14 of its potential returns per unit of risk. Aurskog Sparebank is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 23,550 in Aurskog Sparebank on November 27, 2024 and sell it today you would earn a total of 1,250 from holding Aurskog Sparebank or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grong Sparebank vs. Aurskog Sparebank
Performance |
| Timeline |
| Grong Sparebank |
| Aurskog Sparebank |
Grong Sparebank and Aurskog Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grong Sparebank and Aurskog Sparebank
The main advantage of trading using opposite Grong Sparebank and Aurskog Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grong Sparebank position performs unexpectedly, Aurskog 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 Aurskog Sparebank will offset losses from the drop in Aurskog Sparebank's long position.| Grong Sparebank vs. Sunndal Sparebank | Grong Sparebank vs. Techstep ASA | Grong Sparebank vs. SpareBank 1 stlandet | Grong Sparebank vs. Skue Sparebank |
| Aurskog Sparebank vs. Melhus Sparebank | Aurskog Sparebank vs. Holand og Setskog | Aurskog Sparebank vs. Helgeland Sparebank |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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