Correlation Between Sparebank and Sparebank
Can any of the company-specific risk be diversified away by investing in both Sparebank and 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 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 Sparebank 1 SR, you can compare the effects of market volatilities on Sparebank and 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 Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Sparebank.
Diversification Opportunities for Sparebank and Sparebank
Almost no diversification
The 3 months correlation between Sparebank and Sparebank is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR 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 Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Sparebank i.e., Sparebank and Sparebank go up and down completely randomly.
Pair Corralation between Sparebank and Sparebank
Assuming the 90 days trading horizon Sparebank 1 SMN is expected to generate 1.29 times more return on investment than Sparebank. However, Sparebank is 1.29 times more volatile than Sparebank 1 SR. It trades about 0.0 of its potential returns per unit of risk. Sparebank 1 SR is currently generating about -0.13 per unit of risk. If you would invest 16,430 in Sparebank 1 SMN on August 25, 2024 and sell it today you would lose (28.00) from holding Sparebank 1 SMN or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sparebank 1 SMN vs. Sparebank 1 SR
Performance |
| Timeline |
| Sparebank 1 SMN |
| Sparebank 1 SR |
Sparebank and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Sparebank
The main advantage of trading using opposite Sparebank and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, 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 Sparebank will offset losses from the drop in Sparebank's long position.| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
| Sparebank vs. Sparebank 1 SMN | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA | Sparebank vs. Sparebank 1 Nord Norge |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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