Correlation Between Lollands Bank and Sparekassen Sjaelland
Can any of the company-specific risk be diversified away by investing in both Lollands Bank and Sparekassen Sjaelland 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 Lollands Bank and Sparekassen Sjaelland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lollands Bank and Sparekassen Sjaelland Fyn AS, you can compare the effects of market volatilities on Lollands Bank and Sparekassen Sjaelland 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 Lollands Bank with a short position of Sparekassen Sjaelland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lollands Bank and Sparekassen Sjaelland.
Diversification Opportunities for Lollands Bank and Sparekassen Sjaelland
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lollands and Sparekassen is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lollands Bank and Sparekassen Sjaelland Fyn AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparekassen Sjaelland and Lollands 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 Lollands Bank are associated (or correlated) with Sparekassen Sjaelland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparekassen Sjaelland has no effect on the direction of Lollands Bank i.e., Lollands Bank and Sparekassen Sjaelland go up and down completely randomly.
Pair Corralation between Lollands Bank and Sparekassen Sjaelland
Assuming the 90 days trading horizon Lollands Bank is expected to generate 1.36 times more return on investment than Sparekassen Sjaelland. However, Lollands Bank is 1.36 times more volatile than Sparekassen Sjaelland Fyn AS. It trades about -0.01 of its potential returns per unit of risk. Sparekassen Sjaelland Fyn AS is currently generating about -0.02 per unit of risk. If you would invest 58,000 in Lollands Bank on August 29, 2024 and sell it today you would lose (3,000) from holding Lollands Bank or give up 5.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lollands Bank vs. Sparekassen Sjaelland Fyn AS
Performance |
| Timeline |
| Lollands Bank |
| Sparekassen Sjaelland |
Lollands Bank and Sparekassen Sjaelland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lollands Bank and Sparekassen Sjaelland
The main advantage of trading using opposite Lollands Bank and Sparekassen Sjaelland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lollands Bank position performs unexpectedly, Sparekassen Sjaelland 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 Sparekassen Sjaelland will offset losses from the drop in Sparekassen Sjaelland's long position.| Lollands Bank vs. Skjern Bank AS | Lollands Bank vs. Kreditbanken AS | Lollands Bank vs. Djurslands Bank | Lollands Bank vs. Groenlandsbanken AS |
| Sparekassen Sjaelland vs. Sydbank AS | Sparekassen Sjaelland vs. Spar Nord Bank | Sparekassen Sjaelland vs. Per Aarsleff Holding | Sparekassen Sjaelland vs. Vestjysk Bank AS |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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