Correlation Between Morrow Bank and Sogn Sparebank
Can any of the company-specific risk be diversified away by investing in both Morrow Bank and Sogn 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 Morrow Bank and Sogn Sparebank 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 Sogn Sparebank, you can compare the effects of market volatilities on Morrow Bank and Sogn 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 Morrow Bank with a short position of Sogn Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morrow Bank and Sogn Sparebank.
Diversification Opportunities for Morrow Bank and Sogn Sparebank
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morrow and Sogn is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Morrow Bank ASA and Sogn Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sogn Sparebank 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 Sogn Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sogn Sparebank has no effect on the direction of Morrow Bank i.e., Morrow Bank and Sogn Sparebank go up and down completely randomly.
Pair Corralation between Morrow Bank and Sogn Sparebank
Assuming the 90 days trading horizon Morrow Bank ASA is expected to under-perform the Sogn Sparebank. But the stock apears to be less risky and, when comparing its historical volatility, Morrow Bank ASA is 1.59 times less risky than Sogn Sparebank. The stock trades about -0.06 of its potential returns per unit of risk. The Sogn Sparebank is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest 24,200 in Sogn Sparebank on October 25, 2024 and sell it today you would earn a total of 8,750 from holding Sogn Sparebank or generate 36.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morrow Bank ASA vs. Sogn Sparebank
Performance |
| Timeline |
| Morrow Bank ASA |
| Sogn Sparebank |
Morrow Bank and Sogn Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morrow Bank and Sogn Sparebank
The main advantage of trading using opposite Morrow Bank and Sogn Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morrow Bank position performs unexpectedly, Sogn 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 Sogn Sparebank will offset losses from the drop in Sogn Sparebank's long position.| Morrow Bank vs. Kraft Bank Asa | Morrow Bank vs. Dolphin Drilling AS | Morrow Bank vs. Awilco Drilling PLC | Morrow Bank vs. Skue Sparebank |
| Sogn Sparebank vs. Sparebanken Sor | Sogn Sparebank vs. SpareBank 1 stlandet | Sogn Sparebank vs. Holand og Setskog | Sogn Sparebank vs. Sparebank 1 Ringerike |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |