Correlation Between Lea Bank and Instabank ASA
Can any of the company-specific risk be diversified away by investing in both Lea Bank and Instabank ASA 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 Lea Bank and Instabank ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lea Bank ASA and Instabank ASA, you can compare the effects of market volatilities on Lea Bank and Instabank ASA 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 Lea Bank with a short position of Instabank ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lea Bank and Instabank ASA.
Diversification Opportunities for Lea Bank and Instabank ASA
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lea and Instabank is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lea Bank ASA and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank ASA and Lea 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 Lea Bank ASA are associated (or correlated) with Instabank ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instabank ASA has no effect on the direction of Lea Bank i.e., Lea Bank and Instabank ASA go up and down completely randomly.
Pair Corralation between Lea Bank and Instabank ASA
Assuming the 90 days trading horizon Lea Bank ASA is expected to generate 1.04 times more return on investment than Instabank ASA. However, Lea Bank is 1.04 times more volatile than Instabank ASA. It trades about 0.04 of its potential returns per unit of risk. Instabank ASA is currently generating about 0.04 per unit of risk. If you would invest 841.00 in Lea Bank ASA on September 12, 2024 and sell it today you would earn a total of 199.00 from holding Lea Bank ASA or generate 23.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Lea Bank ASA vs. Instabank ASA
Performance |
| Timeline |
| Lea Bank ASA |
| Instabank ASA |
Lea Bank and Instabank ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lea Bank and Instabank ASA
The main advantage of trading using opposite Lea Bank and Instabank ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lea Bank position performs unexpectedly, Instabank ASA 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 Instabank ASA will offset losses from the drop in Instabank ASA's long position.| Lea Bank vs. Bien Sparebank ASA | Lea Bank vs. Romerike Sparebank | Lea Bank vs. Kongsberg Gruppen ASA | Lea Bank vs. Napatech AS |
| Instabank ASA vs. DnB ASA | Instabank ASA vs. Sparebank 1 SMN | Instabank ASA vs. Sparebanken Mre | Instabank ASA vs. Sparebank 1 Ostfold |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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