Correlation Between Morrow Bank and Lea Bank
Can any of the company-specific risk be diversified away by investing in both Morrow Bank and Lea Bank 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 Lea Bank 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 Lea Bank ASA, you can compare the effects of market volatilities on Morrow Bank and Lea Bank 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 Lea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morrow Bank and Lea Bank.
Diversification Opportunities for Morrow Bank and Lea Bank
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Morrow and Lea is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Morrow Bank ASA and Lea Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lea Bank 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 Lea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lea Bank ASA has no effect on the direction of Morrow Bank i.e., Morrow Bank and Lea Bank go up and down completely randomly.
Pair Corralation between Morrow Bank and Lea Bank
Assuming the 90 days trading horizon Morrow Bank ASA is expected to generate 1.13 times more return on investment than Lea Bank. However, Morrow Bank is 1.13 times more volatile than Lea Bank ASA. It trades about 0.59 of its potential returns per unit of risk. Lea Bank ASA is currently generating about 0.09 per unit of risk. If you would invest 638.00 in Morrow Bank ASA on August 29, 2024 and sell it today you would earn a total of 222.00 from holding Morrow Bank ASA or generate 34.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morrow Bank ASA vs. Lea Bank ASA
Performance |
| Timeline |
| Morrow Bank ASA |
| Lea Bank ASA |
Morrow Bank and Lea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morrow Bank and Lea Bank
The main advantage of trading using opposite Morrow Bank and Lea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morrow Bank position performs unexpectedly, Lea Bank 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 Lea Bank will offset losses from the drop in Lea Bank's long position.| Morrow Bank vs. Grong Sparebank | Morrow Bank vs. Proximar Seafood AS | Morrow Bank vs. Nordic Mining ASA | Morrow Bank vs. Odfjell Technology |
| Lea Bank vs. Elkem ASA | Lea Bank vs. Vow ASA | Lea Bank vs. North Energy ASA | Lea Bank vs. Arcticzymes Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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