Correlation Between Hagar Hf and Arion Banki
Can any of the company-specific risk be diversified away by investing in both Hagar Hf and Arion Banki 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 Hagar Hf and Arion Banki into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hagar hf and Arion banki hf, you can compare the effects of market volatilities on Hagar Hf and Arion Banki 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 Hagar Hf with a short position of Arion Banki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hagar Hf and Arion Banki.
Diversification Opportunities for Hagar Hf and Arion Banki
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hagar and Arion is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hagar hf and Arion banki hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arion banki hf and Hagar Hf 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 Hagar hf are associated (or correlated) with Arion Banki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arion banki hf has no effect on the direction of Hagar Hf i.e., Hagar Hf and Arion Banki go up and down completely randomly.
Pair Corralation between Hagar Hf and Arion Banki
Assuming the 90 days trading horizon Hagar hf is expected to generate 1.17 times more return on investment than Arion Banki. However, Hagar Hf is 1.17 times more volatile than Arion banki hf. It trades about 0.08 of its potential returns per unit of risk. Arion banki hf is currently generating about 0.04 per unit of risk. If you would invest 6,664 in Hagar hf on November 19, 2024 and sell it today you would earn a total of 4,136 from holding Hagar hf or generate 62.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Hagar hf vs. Arion banki hf
Performance |
| Timeline |
| Hagar hf |
| Arion banki hf |
Hagar Hf and Arion Banki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hagar Hf and Arion Banki
The main advantage of trading using opposite Hagar Hf and Arion Banki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hagar Hf position performs unexpectedly, Arion Banki 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 Arion Banki will offset losses from the drop in Arion Banki's long position.| Hagar Hf vs. Icelandair Group hf | Hagar Hf vs. Arion banki hf | Hagar Hf vs. Festi hf | Hagar Hf vs. Kvika banki hf |
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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