Correlation Between Slandsbanki and Kvika Banki
Can any of the company-specific risk be diversified away by investing in both Slandsbanki and Kvika 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 Slandsbanki and Kvika Banki into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between slandsbanki hf and Kvika banki hf, you can compare the effects of market volatilities on Slandsbanki and Kvika 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 Slandsbanki with a short position of Kvika Banki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Slandsbanki and Kvika Banki.
Diversification Opportunities for Slandsbanki and Kvika Banki
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Slandsbanki and Kvika is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding slandsbanki hf and Kvika banki hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kvika banki hf and Slandsbanki 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 slandsbanki hf are associated (or correlated) with Kvika Banki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kvika banki hf has no effect on the direction of Slandsbanki i.e., Slandsbanki and Kvika Banki go up and down completely randomly.
Pair Corralation between Slandsbanki and Kvika Banki
Assuming the 90 days trading horizon slandsbanki hf is expected to generate 0.82 times more return on investment than Kvika Banki. However, slandsbanki hf is 1.22 times less risky than Kvika Banki. It trades about -0.09 of its potential returns per unit of risk. Kvika banki hf is currently generating about -0.13 per unit of risk. If you would invest 12,700 in slandsbanki hf on August 28, 2024 and sell it today you would lose (200.00) from holding slandsbanki hf or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
slandsbanki hf vs. Kvika banki hf
Performance |
| Timeline |
| slandsbanki hf |
| Kvika banki hf |
Slandsbanki and Kvika Banki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Slandsbanki and Kvika Banki
The main advantage of trading using opposite Slandsbanki and Kvika Banki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Slandsbanki position performs unexpectedly, Kvika 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 Kvika Banki will offset losses from the drop in Kvika Banki's long position.The idea behind slandsbanki hf and Kvika banki hf 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.| Kvika Banki vs. Iceland Seafood International | Kvika Banki vs. slandsbanki hf | Kvika Banki vs. Alvotech | Kvika Banki vs. Icelandair Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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