Correlation Between Morrow Bank and Sunndal Sparebank
Can any of the company-specific risk be diversified away by investing in both Morrow Bank and Sunndal 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 Sunndal 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 Sunndal Sparebank, you can compare the effects of market volatilities on Morrow Bank and Sunndal 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 Sunndal Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morrow Bank and Sunndal Sparebank.
Diversification Opportunities for Morrow Bank and Sunndal Sparebank
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Morrow and Sunndal is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Morrow Bank ASA and Sunndal Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunndal 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 Sunndal Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunndal Sparebank has no effect on the direction of Morrow Bank i.e., Morrow Bank and Sunndal Sparebank go up and down completely randomly.
Pair Corralation between Morrow Bank and Sunndal Sparebank
Assuming the 90 days trading horizon Morrow Bank ASA is expected to generate 1.57 times more return on investment than Sunndal Sparebank. However, Morrow Bank is 1.57 times more volatile than Sunndal Sparebank. It trades about 0.54 of its potential returns per unit of risk. Sunndal Sparebank is currently generating about 0.03 per unit of risk. If you would invest 638.00 in Morrow Bank ASA on August 28, 2024 and sell it today you would earn a total of 188.00 from holding Morrow Bank ASA or generate 29.47% 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. Sunndal Sparebank
Performance |
| Timeline |
| Morrow Bank ASA |
| Sunndal Sparebank |
Morrow Bank and Sunndal Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morrow Bank and Sunndal Sparebank
The main advantage of trading using opposite Morrow Bank and Sunndal Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morrow Bank position performs unexpectedly, Sunndal 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 Sunndal Sparebank will offset losses from the drop in Sunndal Sparebank's long position.| Morrow Bank vs. Equinor ASA | Morrow Bank vs. DnB ASA | Morrow Bank vs. Aker BP ASA | Morrow Bank vs. Telenor ASA |
| Sunndal Sparebank vs. DnB ASA | Sunndal Sparebank vs. Sparebank 1 SR | Sunndal Sparebank vs. Sparebank 1 SMN | Sunndal Sparebank vs. Sparebanken Mre |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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