Correlation Between Kvika Banki and Slandsbanki
Can any of the company-specific risk be diversified away by investing in both Kvika Banki and Slandsbanki 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 Kvika Banki and Slandsbanki into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kvika banki hf and slandsbanki hf, you can compare the effects of market volatilities on Kvika Banki and Slandsbanki 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 Kvika Banki with a short position of Slandsbanki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kvika Banki and Slandsbanki.
Diversification Opportunities for Kvika Banki and Slandsbanki
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kvika and Slandsbanki is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Kvika banki hf and slandsbanki hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on slandsbanki hf and Kvika Banki 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 Kvika banki hf are associated (or correlated) with Slandsbanki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of slandsbanki hf has no effect on the direction of Kvika Banki i.e., Kvika Banki and Slandsbanki go up and down completely randomly.
Pair Corralation between Kvika Banki and Slandsbanki
Assuming the 90 days trading horizon Kvika banki hf is expected to under-perform the Slandsbanki. In addition to that, Kvika Banki is 1.22 times more volatile than slandsbanki hf. It trades about -0.13 of its total potential returns per unit of risk. slandsbanki hf is currently generating about -0.09 per unit of volatility. 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 |
Kvika banki hf vs. slandsbanki hf
Performance |
| Timeline |
| Kvika banki hf |
| slandsbanki hf |
Kvika Banki and Slandsbanki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kvika Banki and Slandsbanki
The main advantage of trading using opposite Kvika Banki and Slandsbanki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kvika Banki position performs unexpectedly, Slandsbanki 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 Slandsbanki will offset losses from the drop in Slandsbanki's long position.| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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