Correlation Between ISFELAG HF and Arion Banki
Can any of the company-specific risk be diversified away by investing in both ISFELAG 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 ISFELAG 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 ISFELAG HF and Arion banki hf, you can compare the effects of market volatilities on ISFELAG 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 ISFELAG HF with a short position of Arion Banki. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISFELAG HF and Arion Banki.
Diversification Opportunities for ISFELAG HF and Arion Banki
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between ISFELAG and Arion is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ISFELAG 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 ISFELAG 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 ISFELAG 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 ISFELAG HF i.e., ISFELAG HF and Arion Banki go up and down completely randomly.
Pair Corralation between ISFELAG HF and Arion Banki
Assuming the 90 days trading horizon ISFELAG HF is expected to generate 2.51 times less return on investment than Arion Banki. But when comparing it to its historical volatility, ISFELAG HF is 1.8 times less risky than Arion Banki. It trades about 0.04 of its potential returns per unit of risk. Arion banki hf is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15,450 in Arion banki hf on August 28, 2024 and sell it today you would earn a total of 200.00 from holding Arion banki hf or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ISFELAG HF vs. Arion banki hf
Performance |
| Timeline |
| ISFELAG HF |
| Arion banki hf |
ISFELAG HF and Arion Banki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ISFELAG HF and Arion Banki
The main advantage of trading using opposite ISFELAG HF and Arion Banki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISFELAG 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.| ISFELAG HF vs. Alvotech | ISFELAG HF vs. Arion banki hf | ISFELAG HF vs. Icelandair Group hf | ISFELAG HF vs. slandsbanki hf |
| Arion Banki vs. slandsbanki hf | Arion Banki vs. Kvika banki hf | Arion Banki vs. Alvotech | Arion Banki 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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