Correlation Between Sparebank and Instabank ASA
Can any of the company-specific risk be diversified away by investing in both Sparebank 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 Sparebank and Instabank ASA 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 Instabank ASA, you can compare the effects of market volatilities on Sparebank 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 Sparebank with a short position of Instabank ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Instabank ASA.
Diversification Opportunities for Sparebank and Instabank ASA
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sparebank and Instabank is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank 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 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 Sparebank i.e., Sparebank and Instabank ASA go up and down completely randomly.
Pair Corralation between Sparebank and Instabank ASA
Assuming the 90 days trading horizon Sparebank 1 SMN is expected to generate 0.71 times more return on investment than Instabank ASA. However, Sparebank 1 SMN is 1.41 times less risky than Instabank ASA. It trades about 0.15 of its potential returns per unit of risk. Instabank ASA is currently generating about 0.08 per unit of risk. If you would invest 17,282 in Sparebank 1 SMN on December 11, 2024 and sell it today you would earn a total of 998.00 from holding Sparebank 1 SMN or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SMN vs. Instabank ASA
Performance |
| Timeline |
| Sparebank 1 SMN |
| Instabank ASA |
Sparebank and Instabank ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Instabank ASA
The main advantage of trading using opposite Sparebank and Instabank ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank 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.| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
| Instabank ASA vs. Melhus Sparebank | Instabank ASA vs. Austevoll Seafood ASA | Instabank ASA vs. Sparebanken Ost | Instabank ASA vs. Eidesvik Offshore 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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