Correlation Between Norsk Hydro and Sparebanken Vest
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Sparebanken Vest 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 Vest 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 Vest, you can compare the effects of market volatilities on Norsk Hydro and Sparebanken Vest 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 Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Sparebanken Vest.
Diversification Opportunities for Norsk Hydro and Sparebanken Vest
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norsk and Sparebanken is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Sparebanken Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Vest 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 Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Vest has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Sparebanken Vest go up and down completely randomly.
Pair Corralation between Norsk Hydro and Sparebanken Vest
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to under-perform the Sparebanken Vest. In addition to that, Norsk Hydro is 1.66 times more volatile than Sparebanken Vest. It trades about 0.0 of its total potential returns per unit of risk. Sparebanken Vest is currently generating about 0.01 per unit of volatility. If you would invest 13,168 in Sparebanken Vest on August 31, 2024 and sell it today you would earn a total of 22.00 from holding Sparebanken Vest or generate 0.17% 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 Vest
Performance |
| Timeline |
| Norsk Hydro ASA |
| Sparebanken Vest |
Norsk Hydro and Sparebanken Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Sparebanken Vest
The main advantage of trading using opposite Norsk Hydro and Sparebanken Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Sparebanken Vest 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 Vest will offset losses from the drop in Sparebanken Vest's long position.| Norsk Hydro vs. Yara International ASA | Norsk Hydro vs. Equinor ASA | Norsk Hydro vs. Telenor ASA | Norsk Hydro vs. Orkla ASA |
| Sparebanken Vest vs. Sparebank 1 SMN | Sparebanken Vest vs. Sparebank 1 Nord Norge | Sparebanken Vest vs. Storebrand ASA | Sparebanken Vest vs. Pareto Bank 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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