Correlation Between Sparebank and Salmon Evolution
Can any of the company-specific risk be diversified away by investing in both Sparebank and Salmon Evolution 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 Salmon Evolution 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 Salmon Evolution Holding, you can compare the effects of market volatilities on Sparebank and Salmon Evolution 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 Salmon Evolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Salmon Evolution.
Diversification Opportunities for Sparebank and Salmon Evolution
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sparebank and Salmon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN and Salmon Evolution Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salmon Evolution Holding 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 Salmon Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salmon Evolution Holding has no effect on the direction of Sparebank i.e., Sparebank and Salmon Evolution go up and down completely randomly.
Pair Corralation between Sparebank and Salmon Evolution
Assuming the 90 days trading horizon Sparebank 1 SMN is expected to generate 0.56 times more return on investment than Salmon Evolution. However, Sparebank 1 SMN is 1.78 times less risky than Salmon Evolution. It trades about 0.09 of its potential returns per unit of risk. Salmon Evolution Holding is currently generating about -0.01 per unit of risk. If you would invest 11,717 in Sparebank 1 SMN on January 20, 2025 and sell it today you would earn a total of 5,847 from holding Sparebank 1 SMN or generate 49.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SMN vs. Salmon Evolution Holding
Performance |
| Timeline |
| Sparebank 1 SMN |
| Salmon Evolution Holding |
Sparebank and Salmon Evolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Salmon Evolution
The main advantage of trading using opposite Sparebank and Salmon Evolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Salmon Evolution 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 Salmon Evolution will offset losses from the drop in Salmon Evolution's long position.| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Aurskog Sparebank | Sparebank vs. Helgeland Sparebank | Sparebank vs. Elkem ASA |
| Salmon Evolution vs. Sunndal Sparebank | Salmon Evolution vs. Lery Seafood Group | Salmon Evolution vs. Sparebanken Ost | Salmon Evolution vs. Romerike Sparebank |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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