Correlation Between Iceland Seafood and Sminn Hf
Can any of the company-specific risk be diversified away by investing in both Iceland Seafood and Sminn Hf 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 Iceland Seafood and Sminn Hf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iceland Seafood International and Sminn hf, you can compare the effects of market volatilities on Iceland Seafood and Sminn Hf 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 Iceland Seafood with a short position of Sminn Hf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iceland Seafood and Sminn Hf.
Diversification Opportunities for Iceland Seafood and Sminn Hf
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Iceland and Sminn is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Iceland Seafood International and Sminn hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sminn hf and Iceland Seafood 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 Iceland Seafood International are associated (or correlated) with Sminn Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sminn hf has no effect on the direction of Iceland Seafood i.e., Iceland Seafood and Sminn Hf go up and down completely randomly.
Pair Corralation between Iceland Seafood and Sminn Hf
Assuming the 90 days trading horizon Iceland Seafood International is expected to under-perform the Sminn Hf. But the stock apears to be less risky and, when comparing its historical volatility, Iceland Seafood International is 2.35 times less risky than Sminn Hf. The stock trades about -0.04 of its potential returns per unit of risk. The Sminn hf is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 731.00 in Sminn hf on September 4, 2024 and sell it today you would earn a total of 639.00 from holding Sminn hf or generate 87.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Iceland Seafood International vs. Sminn hf
Performance |
| Timeline |
| Iceland Seafood Inte |
| Sminn hf |
Iceland Seafood and Sminn Hf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iceland Seafood and Sminn Hf
The main advantage of trading using opposite Iceland Seafood and Sminn Hf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iceland Seafood position performs unexpectedly, Sminn Hf 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 Sminn Hf will offset losses from the drop in Sminn Hf's long position.| Iceland Seafood vs. Icelandair Group hf | Iceland Seafood vs. slandsbanki hf | Iceland Seafood vs. Arion banki hf | Iceland Seafood vs. Kvika banki hf |
| Sminn Hf vs. Arion banki hf | Sminn Hf vs. Alvotech | Sminn Hf vs. Kvika banki hf | Sminn Hf vs. Iceland Seafood International |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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