Correlation Between Integrated Diagnostics and Sparebank
Can any of the company-specific risk be diversified away by investing in both Integrated Diagnostics and 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 Integrated Diagnostics and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Integrated Diagnostics Holdings and Sparebank 1 SR, you can compare the effects of market volatilities on Integrated Diagnostics and 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 Integrated Diagnostics with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Diagnostics and Sparebank.
Diversification Opportunities for Integrated Diagnostics and Sparebank
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Integrated and Sparebank is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Diagnostics Holding and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR and Integrated Diagnostics 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 Integrated Diagnostics Holdings are associated (or correlated) with Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Integrated Diagnostics i.e., Integrated Diagnostics and Sparebank go up and down completely randomly.
Pair Corralation between Integrated Diagnostics and Sparebank
Assuming the 90 days trading horizon Integrated Diagnostics is expected to generate 2.0 times less return on investment than Sparebank. In addition to that, Integrated Diagnostics is 3.48 times more volatile than Sparebank 1 SR. It trades about 0.01 of its total potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.06 per unit of volatility. If you would invest 11,801 in Sparebank 1 SR on September 12, 2024 and sell it today you would earn a total of 2,799 from holding Sparebank 1 SR or generate 23.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Integrated Diagnostics Holding vs. Sparebank 1 SR
Performance |
| Timeline |
| Integrated Diagnostics |
| Sparebank 1 SR |
Integrated Diagnostics and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Integrated Diagnostics and Sparebank
The main advantage of trading using opposite Integrated Diagnostics and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Diagnostics position performs unexpectedly, 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 Sparebank will offset losses from the drop in Sparebank's long position.The idea behind Integrated Diagnostics Holdings and Sparebank 1 SR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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