Correlation Between Sparebank and Hermana Holding
Can any of the company-specific risk be diversified away by investing in both Sparebank and Hermana Holding 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 Sparebank and Hermana Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 SMN and Hermana Holding ASA, you can compare the effects of market volatilities on Sparebank and Hermana Holding 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 Sparebank with a short position of Hermana Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Hermana Holding.
Diversification Opportunities for Sparebank and Hermana Holding
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sparebank and Hermana is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN and Hermana Holding ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermana Holding ASA and 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 Sparebank 1 SMN are associated (or correlated) with Hermana Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermana Holding ASA has no effect on the direction of Sparebank i.e., Sparebank and Hermana Holding go up and down completely randomly.
Pair Corralation between Sparebank and Hermana Holding
Assuming the 90 days trading horizon Sparebank 1 SMN is expected to generate 0.38 times more return on investment than Hermana Holding. However, Sparebank 1 SMN is 2.63 times less risky than Hermana Holding. It trades about 0.19 of its potential returns per unit of risk. Hermana Holding ASA is currently generating about -0.08 per unit of risk. If you would invest 15,454 in Sparebank 1 SMN on November 2, 2024 and sell it today you would earn a total of 2,804 from holding Sparebank 1 SMN or generate 18.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SMN vs. Hermana Holding ASA
Performance |
| Timeline |
| Sparebank 1 SMN |
| Hermana Holding ASA |
Sparebank and Hermana Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Hermana Holding
The main advantage of trading using opposite Sparebank and Hermana Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Hermana Holding 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 Hermana Holding will offset losses from the drop in Hermana Holding's long position.| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
| Hermana Holding vs. Equinor ASA | Hermana Holding vs. DnB ASA | Hermana Holding vs. Aker BP ASA | Hermana Holding vs. Telenor ASA |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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