Correlation Between Sparebank and Itera ASA
Can any of the company-specific risk be diversified away by investing in both Sparebank and Itera 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 Itera 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 Itera ASA, you can compare the effects of market volatilities on Sparebank and Itera 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 Itera ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Itera ASA.
Diversification Opportunities for Sparebank and Itera ASA
Very good diversification
The 3 months correlation between Sparebank and Itera is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN and Itera ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itera 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 Itera ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itera ASA has no effect on the direction of Sparebank i.e., Sparebank and Itera ASA go up and down completely randomly.
Pair Corralation between Sparebank and Itera ASA
Assuming the 90 days trading horizon Sparebank 1 SMN is expected to generate 0.35 times more return on investment than Itera ASA. However, Sparebank 1 SMN is 2.89 times less risky than Itera ASA. It trades about 0.16 of its potential returns per unit of risk. Itera ASA is currently generating about -0.05 per unit of risk. If you would invest 15,322 in Sparebank 1 SMN on November 3, 2024 and sell it today you would earn a total of 2,928 from holding Sparebank 1 SMN or generate 19.11% 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. Itera ASA
Performance |
| Timeline |
| Sparebank 1 SMN |
| Itera ASA |
Sparebank and Itera ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Itera ASA
The main advantage of trading using opposite Sparebank and Itera ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Itera 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 Itera ASA will offset losses from the drop in Itera ASA's long position.| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
| Itera ASA vs. Grieg Seafood ASA | Itera ASA vs. Skue Sparebank | Itera ASA vs. Melhus Sparebank | Itera ASA vs. SpareBank 1 stlandet |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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