Correlation Between Kraft Bank and Morrow Bank
Can any of the company-specific risk be diversified away by investing in both Kraft Bank and Morrow Bank 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 Morrow Bank 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 Morrow Bank ASA, you can compare the effects of market volatilities on Kraft Bank and Morrow Bank 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 Morrow Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Bank and Morrow Bank.
Diversification Opportunities for Kraft Bank and Morrow Bank
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kraft and Morrow is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Bank Asa and Morrow Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morrow Bank ASA 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 Morrow Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morrow Bank ASA has no effect on the direction of Kraft Bank i.e., Kraft Bank and Morrow Bank go up and down completely randomly.
Pair Corralation between Kraft Bank and Morrow Bank
Assuming the 90 days trading horizon Kraft Bank is expected to generate 4.1 times less return on investment than Morrow Bank. In addition to that, Kraft Bank is 1.06 times more volatile than Morrow Bank ASA. It trades about 0.03 of its total potential returns per unit of risk. Morrow Bank ASA is currently generating about 0.15 per unit of volatility. If you would invest 351.00 in Morrow Bank ASA on August 25, 2024 and sell it today you would earn a total of 419.00 from holding Morrow Bank ASA or generate 119.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kraft Bank Asa vs. Morrow Bank ASA
Performance |
| Timeline |
| Kraft Bank Asa |
| Morrow Bank ASA |
Kraft Bank and Morrow Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kraft Bank and Morrow Bank
The main advantage of trading using opposite Kraft Bank and Morrow Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Bank position performs unexpectedly, Morrow Bank 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 Morrow Bank will offset losses from the drop in Morrow Bank'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 |
| Morrow Bank vs. Equinor ASA | Morrow Bank vs. DnB ASA | Morrow Bank vs. Aker BP ASA | Morrow Bank vs. Telenor 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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