Correlation Between Grong Sparebank and Pareto Bank
Can any of the company-specific risk be diversified away by investing in both Grong Sparebank and Pareto Bank 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 Pareto Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grong Sparebank and Pareto Bank ASA, you can compare the effects of market volatilities on Grong Sparebank and Pareto Bank 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 Pareto Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grong Sparebank and Pareto Bank.
Diversification Opportunities for Grong Sparebank and Pareto Bank
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grong and Pareto is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Grong Sparebank and Pareto Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pareto Bank ASA 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 Pareto Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pareto Bank ASA has no effect on the direction of Grong Sparebank i.e., Grong Sparebank and Pareto Bank go up and down completely randomly.
Pair Corralation between Grong Sparebank and Pareto Bank
Assuming the 90 days trading horizon Grong Sparebank is expected to under-perform the Pareto Bank. But the stock apears to be less risky and, when comparing its historical volatility, Grong Sparebank is 1.45 times less risky than Pareto Bank. The stock trades about 0.0 of its potential returns per unit of risk. The Pareto Bank ASA is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 6,800 in Pareto Bank ASA on November 3, 2024 and sell it today you would earn a total of 590.00 from holding Pareto Bank ASA or generate 8.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grong Sparebank vs. Pareto Bank ASA
Performance |
| Timeline |
| Grong Sparebank |
| Pareto Bank ASA |
Grong Sparebank and Pareto Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grong Sparebank and Pareto Bank
The main advantage of trading using opposite Grong Sparebank and Pareto Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grong Sparebank position performs unexpectedly, Pareto Bank 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 Pareto Bank will offset losses from the drop in Pareto Bank's long position.| Grong Sparebank vs. Morrow Bank ASA | Grong Sparebank vs. Nordic Mining ASA | Grong Sparebank vs. Instabank ASA | Grong Sparebank vs. Sparebank 1 SMN |
| Pareto Bank vs. Sparebank 1 SMN | Pareto Bank vs. Storebrand ASA | Pareto Bank vs. DnB ASA | Pareto Bank vs. Europris 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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