Correlation Between Nidaros Sparebank and Awilco Drilling
Can any of the company-specific risk be diversified away by investing in both Nidaros Sparebank and Awilco Drilling 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 Nidaros Sparebank and Awilco Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nidaros Sparebank and Awilco Drilling PLC, you can compare the effects of market volatilities on Nidaros Sparebank and Awilco Drilling 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 Nidaros Sparebank with a short position of Awilco Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nidaros Sparebank and Awilco Drilling.
Diversification Opportunities for Nidaros Sparebank and Awilco Drilling
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nidaros and Awilco is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nidaros Sparebank and Awilco Drilling PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awilco Drilling PLC and Nidaros Sparebank 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 Nidaros Sparebank are associated (or correlated) with Awilco Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awilco Drilling PLC has no effect on the direction of Nidaros Sparebank i.e., Nidaros Sparebank and Awilco Drilling go up and down completely randomly.
Pair Corralation between Nidaros Sparebank and Awilco Drilling
Assuming the 90 days trading horizon Nidaros Sparebank is expected to generate 0.31 times more return on investment than Awilco Drilling. However, Nidaros Sparebank is 3.23 times less risky than Awilco Drilling. It trades about 0.02 of its potential returns per unit of risk. Awilco Drilling PLC is currently generating about -0.01 per unit of risk. If you would invest 9,851 in Nidaros Sparebank on September 2, 2024 and sell it today you would earn a total of 149.00 from holding Nidaros Sparebank or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nidaros Sparebank vs. Awilco Drilling PLC
Performance |
| Timeline |
| Nidaros Sparebank |
| Awilco Drilling PLC |
Nidaros Sparebank and Awilco Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nidaros Sparebank and Awilco Drilling
The main advantage of trading using opposite Nidaros Sparebank and Awilco Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nidaros Sparebank position performs unexpectedly, Awilco Drilling 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 Awilco Drilling will offset losses from the drop in Awilco Drilling's long position.| Nidaros Sparebank vs. Sparebank 1 SMN | Nidaros Sparebank vs. Sparebank 1 Nord Norge | Nidaros Sparebank vs. Sparebanken Vest | Nidaros Sparebank vs. Sparebank 1 Ostfold |
| Awilco Drilling vs. DnB ASA | Awilco Drilling vs. Mowi ASA | Awilco Drilling vs. Yara International ASA | Awilco Drilling vs. Telenor 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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