Correlation Between Melhus Sparebank and Sparebank
Can any of the company-specific risk be diversified away by investing in both Melhus Sparebank and Sparebank 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 Melhus Sparebank and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melhus Sparebank and Sparebank 1 Ringerike, you can compare the effects of market volatilities on Melhus Sparebank and Sparebank 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 Melhus Sparebank with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melhus Sparebank and Sparebank.
Diversification Opportunities for Melhus Sparebank and Sparebank
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Melhus and Sparebank is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Melhus Sparebank and Sparebank 1 Ringerike in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 Ringerike and Melhus Sparebank 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 Melhus Sparebank are associated (or correlated) with Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 Ringerike has no effect on the direction of Melhus Sparebank i.e., Melhus Sparebank and Sparebank go up and down completely randomly.
Pair Corralation between Melhus Sparebank and Sparebank
Assuming the 90 days trading horizon Melhus Sparebank is expected to generate 1.98 times less return on investment than Sparebank. But when comparing it to its historical volatility, Melhus Sparebank is 1.14 times less risky than Sparebank. It trades about 0.06 of its potential returns per unit of risk. Sparebank 1 Ringerike is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 29,000 in Sparebank 1 Ringerike on August 25, 2024 and sell it today you would earn a total of 3,500 from holding Sparebank 1 Ringerike or generate 12.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melhus Sparebank vs. Sparebank 1 Ringerike
Performance |
| Timeline |
| Melhus Sparebank |
| Sparebank 1 Ringerike |
Melhus Sparebank and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melhus Sparebank and Sparebank
The main advantage of trading using opposite Melhus Sparebank and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melhus Sparebank position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.| Melhus Sparebank vs. Sparebank 1 Nord Norge | Melhus Sparebank vs. Aurskog Sparebank | Melhus Sparebank vs. Helgeland Sparebank |
| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebank 1 SMN | Sparebank vs. Sparebanken Vest | Sparebank 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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