Correlation Between Morrow Bank and EAM Solar
Can any of the company-specific risk be diversified away by investing in both Morrow Bank and EAM Solar 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 Morrow Bank and EAM Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morrow Bank ASA and EAM Solar ASA, you can compare the effects of market volatilities on Morrow Bank and EAM Solar 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 Morrow Bank with a short position of EAM Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morrow Bank and EAM Solar.
Diversification Opportunities for Morrow Bank and EAM Solar
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Morrow and EAM is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Morrow Bank ASA and EAM Solar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAM Solar ASA and Morrow Bank 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 Morrow Bank ASA are associated (or correlated) with EAM Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAM Solar ASA has no effect on the direction of Morrow Bank i.e., Morrow Bank and EAM Solar go up and down completely randomly.
Pair Corralation between Morrow Bank and EAM Solar
Assuming the 90 days trading horizon Morrow Bank is expected to generate 10.14 times less return on investment than EAM Solar. But when comparing it to its historical volatility, Morrow Bank ASA is 30.39 times less risky than EAM Solar. It trades about 0.24 of its potential returns per unit of risk. EAM Solar ASA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 958.00 in EAM Solar ASA on September 13, 2024 and sell it today you would lose (942.00) from holding EAM Solar ASA or give up 98.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morrow Bank ASA vs. EAM Solar ASA
Performance |
| Timeline |
| Morrow Bank ASA |
| EAM Solar ASA |
Morrow Bank and EAM Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morrow Bank and EAM Solar
The main advantage of trading using opposite Morrow Bank and EAM Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morrow Bank position performs unexpectedly, EAM Solar 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 EAM Solar will offset losses from the drop in EAM Solar's long position.| Morrow Bank vs. Equinor ASA | Morrow Bank vs. DnB ASA | Morrow Bank vs. Aker BP ASA | Morrow Bank vs. Telenor ASA |
| EAM Solar vs. Morrow Bank ASA | EAM Solar vs. Norwegian Air Shuttle | EAM Solar vs. Grong Sparebank | EAM Solar vs. Nordic Semiconductor 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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