Correlation Between Sparebank and Nidaros Sparebank
Can any of the company-specific risk be diversified away by investing in both Sparebank and Nidaros 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 Sparebank and Nidaros Sparebank 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 Nidaros Sparebank, you can compare the effects of market volatilities on Sparebank and Nidaros 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 Sparebank with a short position of Nidaros Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Nidaros Sparebank.
Diversification Opportunities for Sparebank and Nidaros Sparebank
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sparebank and Nidaros is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN and Nidaros Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidaros Sparebank 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 Nidaros Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidaros Sparebank has no effect on the direction of Sparebank i.e., Sparebank and Nidaros Sparebank go up and down completely randomly.
Pair Corralation between Sparebank and Nidaros Sparebank
Assuming the 90 days trading horizon Sparebank 1 SMN is expected to generate 0.46 times more return on investment than Nidaros Sparebank. However, Sparebank 1 SMN is 2.15 times less risky than Nidaros Sparebank. It trades about 0.36 of its potential returns per unit of risk. Nidaros Sparebank is currently generating about 0.08 per unit of risk. If you would invest 17,088 in Sparebank 1 SMN on November 3, 2024 and sell it today you would earn a total of 1,162 from holding Sparebank 1 SMN or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SMN vs. Nidaros Sparebank
Performance |
| Timeline |
| Sparebank 1 SMN |
| Nidaros Sparebank |
Sparebank and Nidaros Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Nidaros Sparebank
The main advantage of trading using opposite Sparebank and Nidaros Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Nidaros 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 Nidaros Sparebank will offset losses from the drop in Nidaros Sparebank's long position.| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
| Nidaros Sparebank vs. Helgeland Sparebank | Nidaros Sparebank vs. Arcticzymes Technologies ASA | Nidaros Sparebank vs. Sparebanken Ost | Nidaros Sparebank vs. Cloudberry Clean Energy |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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