Correlation Between Sparebank and Olav Thon
Can any of the company-specific risk be diversified away by investing in both Sparebank and Olav Thon 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 Olav Thon 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 Olav Thon Eien, you can compare the effects of market volatilities on Sparebank and Olav Thon 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 Olav Thon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Olav Thon.
Diversification Opportunities for Sparebank and Olav Thon
Very good diversification
The 3 months correlation between Sparebank and Olav is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN and Olav Thon Eien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olav Thon Eien 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 Olav Thon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olav Thon Eien has no effect on the direction of Sparebank i.e., Sparebank and Olav Thon go up and down completely randomly.
Pair Corralation between Sparebank and Olav Thon
Assuming the 90 days trading horizon Sparebank 1 SMN is expected to generate 0.96 times more return on investment than Olav Thon. However, Sparebank 1 SMN is 1.04 times less risky than Olav Thon. It trades about 0.02 of its potential returns per unit of risk. Olav Thon Eien is currently generating about -0.06 per unit of risk. If you would invest 16,460 in Sparebank 1 SMN on August 24, 2024 and sell it today you would earn a total of 40.00 from holding Sparebank 1 SMN or generate 0.24% 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. Olav Thon Eien
Performance |
| Timeline |
| Sparebank 1 SMN |
| Olav Thon Eien |
Sparebank and Olav Thon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Olav Thon
The main advantage of trading using opposite Sparebank and Olav Thon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Olav Thon 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 Olav Thon will offset losses from the drop in Olav Thon's long position.| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
| Olav Thon vs. Entra ASA | Olav Thon vs. Veidekke ASA | Olav Thon vs. Selvaag Bolig ASA | Olav Thon vs. Storebrand 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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