Correlation Between Icelandic Salmon and Arion Banki
Can any of the company-specific risk be diversified away by investing in both Icelandic Salmon 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 Icelandic Salmon and Arion Banki into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icelandic Salmon AS and Arion banki hf, you can compare the effects of market volatilities on Icelandic Salmon 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 Icelandic Salmon with a short position of Arion Banki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icelandic Salmon and Arion Banki.
Diversification Opportunities for Icelandic Salmon and Arion Banki
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icelandic and Arion is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Icelandic Salmon AS 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 Icelandic Salmon 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 Icelandic Salmon AS 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 Icelandic Salmon i.e., Icelandic Salmon and Arion Banki go up and down completely randomly.
Pair Corralation between Icelandic Salmon and Arion Banki
Assuming the 90 days trading horizon Icelandic Salmon AS is expected to generate 1.38 times more return on investment than Arion Banki. However, Icelandic Salmon is 1.38 times more volatile than Arion banki hf. It trades about 0.01 of its potential returns per unit of risk. Arion banki hf is currently generating about -0.03 per unit of risk. If you would invest 150,000 in Icelandic Salmon AS on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Icelandic Salmon AS or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icelandic Salmon AS vs. Arion banki hf
Performance |
| Timeline |
| Icelandic Salmon |
| Arion banki hf |
Icelandic Salmon and Arion Banki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icelandic Salmon and Arion Banki
The main advantage of trading using opposite Icelandic Salmon and Arion Banki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icelandic Salmon 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.| Icelandic Salmon vs. Iceland Seafood International | Icelandic Salmon vs. Arion banki hf | Icelandic Salmon vs. Kvika banki hf | Icelandic Salmon vs. slandsbanki hf |
| Arion Banki vs. slandsbanki hf | Arion Banki vs. Icelandair Group hf | Arion Banki vs. Marel hf | Arion Banki vs. Kvika banki 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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