Correlation Between Kraft Bank and Sparebank
Can any of the company-specific risk be diversified away by investing in both Kraft Bank 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 Kraft Bank and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kraft Bank Asa and Sparebank 1 SMN, you can compare the effects of market volatilities on Kraft Bank 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 Kraft Bank with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Bank and Sparebank.
Diversification Opportunities for Kraft Bank and Sparebank
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kraft and Sparebank is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Bank Asa and Sparebank 1 SMN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SMN and Kraft Bank 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 Kraft Bank Asa 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 SMN has no effect on the direction of Kraft Bank i.e., Kraft Bank and Sparebank go up and down completely randomly.
Pair Corralation between Kraft Bank and Sparebank
Assuming the 90 days trading horizon Kraft Bank is expected to generate 3.66 times less return on investment than Sparebank. In addition to that, Kraft Bank is 1.87 times more volatile than Sparebank 1 SMN. It trades about 0.01 of its total potential returns per unit of risk. Sparebank 1 SMN is currently generating about 0.09 per unit of volatility. If you would invest 10,160 in Sparebank 1 SMN on August 25, 2024 and sell it today you would earn a total of 6,242 from holding Sparebank 1 SMN or generate 61.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kraft Bank Asa vs. Sparebank 1 SMN
Performance |
| Timeline |
| Kraft Bank Asa |
| Sparebank 1 SMN |
Kraft Bank and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kraft Bank and Sparebank
The main advantage of trading using opposite Kraft Bank and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Bank 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.| Kraft Bank vs. DnB ASA | Kraft Bank vs. Sparebank 1 SR | Kraft Bank vs. Sparebank 1 SMN | Kraft Bank vs. Sparebanken Mre |
| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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