Correlation Between Sparebank and Sparebanken Mre
Can any of the company-specific risk be diversified away by investing in both Sparebank and Sparebanken Mre 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 Sparebanken Mre 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 Sparebanken Mre, you can compare the effects of market volatilities on Sparebank and Sparebanken Mre 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 Sparebanken Mre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Sparebanken Mre.
Diversification Opportunities for Sparebank and Sparebanken Mre
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sparebank and Sparebanken is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN and Sparebanken Mre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Mre 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 Sparebanken Mre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Mre has no effect on the direction of Sparebank i.e., Sparebank and Sparebanken Mre go up and down completely randomly.
Pair Corralation between Sparebank and Sparebanken Mre
Assuming the 90 days trading horizon Sparebank 1 SMN is expected to under-perform the Sparebanken Mre. But the stock apears to be less risky and, when comparing its historical volatility, Sparebank 1 SMN is 1.46 times less risky than Sparebanken Mre. The stock trades about -0.03 of its potential returns per unit of risk. The Sparebanken Mre is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8,820 in Sparebanken Mre on August 29, 2024 and sell it today you would earn a total of 380.00 from holding Sparebanken Mre or generate 4.31% 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. Sparebanken Mre
Performance |
| Timeline |
| Sparebank 1 SMN |
| Sparebanken Mre |
Sparebank and Sparebanken Mre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Sparebanken Mre
The main advantage of trading using opposite Sparebank and Sparebanken Mre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Sparebanken Mre 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 Sparebanken Mre will offset losses from the drop in Sparebanken Mre's long position.| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
| Sparebanken Mre vs. DnB ASA | Sparebanken Mre vs. Sparebank 1 SR | Sparebanken Mre vs. Sparebank 1 SMN | Sparebanken Mre 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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