Correlation Between Matas AS and Spar Nord
Can any of the company-specific risk be diversified away by investing in both Matas AS and Spar Nord 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 Matas AS and Spar Nord into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matas AS and Spar Nord Bank, you can compare the effects of market volatilities on Matas AS and Spar Nord 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 Matas AS with a short position of Spar Nord. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matas AS and Spar Nord.
Diversification Opportunities for Matas AS and Spar Nord
Weak diversification
The 3 months correlation between Matas and Spar is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Matas AS and Spar Nord Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spar Nord Bank and Matas AS 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 Matas AS are associated (or correlated) with Spar Nord. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spar Nord Bank has no effect on the direction of Matas AS i.e., Matas AS and Spar Nord go up and down completely randomly.
Pair Corralation between Matas AS and Spar Nord
Assuming the 90 days trading horizon Matas AS is expected to generate 1.1 times more return on investment than Spar Nord. However, Matas AS is 1.1 times more volatile than Spar Nord Bank. It trades about 0.08 of its potential returns per unit of risk. Spar Nord Bank is currently generating about 0.06 per unit of risk. If you would invest 6,544 in Matas AS on August 29, 2024 and sell it today you would earn a total of 5,976 from holding Matas AS or generate 91.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matas AS vs. Spar Nord Bank
Performance |
| Timeline |
| Matas AS |
| Spar Nord Bank |
Matas AS and Spar Nord Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matas AS and Spar Nord
The main advantage of trading using opposite Matas AS and Spar Nord positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matas AS position performs unexpectedly, Spar Nord 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 Spar Nord will offset losses from the drop in Spar Nord's long position.The idea behind Matas AS and Spar Nord Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Spar Nord vs. Sydbank AS | Spar Nord vs. Jyske Bank AS | Spar Nord vs. Alm Brand | Spar Nord vs. Nordea Bank Abp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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