Correlation Between Helgeland Sparebank and Pareto Bank
Can any of the company-specific risk be diversified away by investing in both Helgeland 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 Helgeland 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 Helgeland Sparebank and Pareto Bank ASA, you can compare the effects of market volatilities on Helgeland 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 Helgeland Sparebank with a short position of Pareto Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Helgeland Sparebank and Pareto Bank.
Diversification Opportunities for Helgeland Sparebank and Pareto Bank
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Helgeland and Pareto is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Helgeland 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 Helgeland 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 Helgeland 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 Helgeland Sparebank i.e., Helgeland Sparebank and Pareto Bank go up and down completely randomly.
Pair Corralation between Helgeland Sparebank and Pareto Bank
Assuming the 90 days trading horizon Helgeland Sparebank is expected to generate 1.35 times more return on investment than Pareto Bank. However, Helgeland Sparebank is 1.35 times more volatile than Pareto Bank ASA. It trades about -0.04 of its potential returns per unit of risk. Pareto Bank ASA is currently generating about -0.13 per unit of risk. If you would invest 14,644 in Helgeland Sparebank on September 15, 2024 and sell it today you would lose (244.00) from holding Helgeland Sparebank or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Helgeland Sparebank vs. Pareto Bank ASA
Performance |
| Timeline |
| Helgeland Sparebank |
| Pareto Bank ASA |
Helgeland Sparebank and Pareto Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Helgeland Sparebank and Pareto Bank
The main advantage of trading using opposite Helgeland Sparebank and Pareto Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helgeland 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.| Helgeland Sparebank vs. Aurskog Sparebank | Helgeland Sparebank vs. Kongsberg Gruppen ASA | Helgeland Sparebank vs. Napatech AS | Helgeland Sparebank vs. Elkem ASA |
| Pareto Bank vs. Aurskog Sparebank | Pareto Bank vs. Helgeland Sparebank | Pareto Bank vs. Kongsberg Gruppen ASA | Pareto Bank vs. Napatech 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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