Correlation Between Norsk Hydro and Sparebanken Sor
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Sparebanken Sor 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 Norsk Hydro and Sparebanken Sor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norsk Hydro ASA and Sparebanken Sor, you can compare the effects of market volatilities on Norsk Hydro and Sparebanken Sor 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 Norsk Hydro with a short position of Sparebanken Sor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Sparebanken Sor.
Diversification Opportunities for Norsk Hydro and Sparebanken Sor
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norsk and Sparebanken is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Sparebanken Sor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Sor and Norsk Hydro 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 Norsk Hydro ASA are associated (or correlated) with Sparebanken Sor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Sor has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Sparebanken Sor go up and down completely randomly.
Pair Corralation between Norsk Hydro and Sparebanken Sor
Assuming the 90 days trading horizon Norsk Hydro is expected to generate 3.81 times less return on investment than Sparebanken Sor. In addition to that, Norsk Hydro is 1.09 times more volatile than Sparebanken Sor. It trades about 0.03 of its total potential returns per unit of risk. Sparebanken Sor is currently generating about 0.11 per unit of volatility. If you would invest 14,980 in Sparebanken Sor on August 28, 2024 and sell it today you would earn a total of 3,954 from holding Sparebanken Sor or generate 26.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Sparebanken Sor
Performance |
| Timeline |
| Norsk Hydro ASA |
| Sparebanken Sor |
Norsk Hydro and Sparebanken Sor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Sparebanken Sor
The main advantage of trading using opposite Norsk Hydro and Sparebanken Sor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Sparebanken Sor 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 Sparebanken Sor will offset losses from the drop in Sparebanken Sor's long position.| Norsk Hydro vs. Goodtech | Norsk Hydro vs. Havila Shipping ASA | Norsk Hydro vs. Eidesvik Offshore ASA | Norsk Hydro vs. Byggma |
| Sparebanken Sor vs. Sparebanken Vest | Sparebanken Sor vs. Sparebank 1 Nord Norge | Sparebanken Sor vs. Sparebank 1 SMN | Sparebanken Sor vs. Sparebanken Ost |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |