Correlation Between Kvika Banki and Lgerin Egill
Can any of the company-specific risk be diversified away by investing in both Kvika Banki and Lgerin Egill 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 Lgerin Egill 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 lgerin Egill Skallagrmsson, you can compare the effects of market volatilities on Kvika Banki and Lgerin Egill 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 Lgerin Egill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kvika Banki and Lgerin Egill.
Diversification Opportunities for Kvika Banki and Lgerin Egill
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kvika and Lgerin is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kvika banki hf and lgerin Egill Skallagrmsson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on lgerin Egill Skallag 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 Lgerin Egill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of lgerin Egill Skallag has no effect on the direction of Kvika Banki i.e., Kvika Banki and Lgerin Egill go up and down completely randomly.
Pair Corralation between Kvika Banki and Lgerin Egill
Assuming the 90 days trading horizon Kvika banki hf is expected to under-perform the Lgerin Egill. But the stock apears to be less risky and, when comparing its historical volatility, Kvika banki hf is 1.07 times less risky than Lgerin Egill. The stock trades about -0.02 of its potential returns per unit of risk. The lgerin Egill Skallagrmsson is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,730 in lgerin Egill Skallagrmsson on August 29, 2024 and sell it today you would earn a total of 60.00 from holding lgerin Egill Skallagrmsson or generate 3.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Kvika banki hf vs. lgerin Egill Skallagrmsson
Performance |
Timeline |
Kvika banki hf |
lgerin Egill Skallag |
Kvika Banki and Lgerin Egill Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kvika Banki and Lgerin Egill
The main advantage of trading using opposite Kvika Banki and Lgerin Egill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kvika Banki position performs unexpectedly, Lgerin Egill 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 Lgerin Egill will offset losses from the drop in Lgerin Egill's long position.Kvika Banki vs. Arion banki hf | Kvika Banki vs. Iceland Seafood International | Kvika Banki vs. slandsbanki 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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