Correlation Between Sparebank and Petronor
Can any of the company-specific risk be diversified away by investing in both Sparebank and Petronor 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 Petronor 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 Petronor EP, you can compare the effects of market volatilities on Sparebank and Petronor 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 Petronor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Petronor.
Diversification Opportunities for Sparebank and Petronor
Very weak diversification
The 3 months correlation between Sparebank and Petronor is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN and Petronor EP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronor EP 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 Petronor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petronor EP has no effect on the direction of Sparebank i.e., Sparebank and Petronor go up and down completely randomly.
Pair Corralation between Sparebank and Petronor
Assuming the 90 days trading horizon Sparebank 1 SMN is expected to generate 0.5 times more return on investment than Petronor. However, Sparebank 1 SMN is 2.01 times less risky than Petronor. It trades about 0.09 of its potential returns per unit of risk. Petronor EP is currently generating about 0.03 per unit of risk. If you would invest 10,055 in Sparebank 1 SMN on September 3, 2024 and sell it today you would earn a total of 6,355 from holding Sparebank 1 SMN or generate 63.2% 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. Petronor EP
Performance |
| Timeline |
| Sparebank 1 SMN |
| Petronor EP |
Sparebank and Petronor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Petronor
The main advantage of trading using opposite Sparebank and Petronor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Petronor 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 Petronor will offset losses from the drop in Petronor's long position.| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
| Petronor vs. Sparebank 1 SMN | Petronor vs. Skue Sparebank | Petronor vs. Jaeren Sparebank | Petronor 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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