Correlation Between Grong Sparebank and Romsdal Sparebank
Can any of the company-specific risk be diversified away by investing in both Grong Sparebank 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 Grong Sparebank and Romsdal 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 Romsdal Sparebank, you can compare the effects of market volatilities on Grong Sparebank 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 Grong Sparebank with a short position of Romsdal Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grong Sparebank and Romsdal Sparebank.
Diversification Opportunities for Grong Sparebank and Romsdal Sparebank
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Grong and Romsdal is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Grong Sparebank and Romsdal Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romsdal 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 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 Grong Sparebank i.e., Grong Sparebank and Romsdal Sparebank go up and down completely randomly.
Pair Corralation between Grong Sparebank and Romsdal Sparebank
Assuming the 90 days trading horizon Grong Sparebank is expected to generate 1.9 times more return on investment than Romsdal Sparebank. However, Grong Sparebank is 1.9 times more volatile than Romsdal Sparebank. It trades about 0.0 of its potential returns per unit of risk. Romsdal Sparebank is currently generating about -0.14 per unit of risk. If you would invest 15,000 in Grong Sparebank on September 1, 2024 and sell it today you would lose (4.00) from holding Grong Sparebank or give up 0.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grong Sparebank vs. Romsdal Sparebank
Performance |
| Timeline |
| Grong Sparebank |
| Romsdal Sparebank |
Grong Sparebank and Romsdal Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grong Sparebank and Romsdal Sparebank
The main advantage of trading using opposite Grong Sparebank and Romsdal Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grong Sparebank 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.| Grong Sparebank vs. Odfjell Drilling | Grong Sparebank vs. Sparebank 1 SMN | Grong Sparebank vs. Norwegian Air Shuttle | Grong Sparebank vs. Dolphin Drilling AS |
| Romsdal Sparebank vs. Proximar Seafood AS | Romsdal Sparebank vs. Norwegian Air Shuttle | Romsdal Sparebank vs. Lery Seafood Group | Romsdal Sparebank vs. NorAm Drilling AS |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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