Correlation Between Nidaros Sparebank and Sparebank
Can any of the company-specific risk be diversified away by investing in both Nidaros Sparebank and 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 Nidaros Sparebank and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nidaros Sparebank and Sparebank 1 SMN, you can compare the effects of market volatilities on Nidaros Sparebank and 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 Nidaros Sparebank with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nidaros Sparebank and Sparebank.
Diversification Opportunities for Nidaros Sparebank and Sparebank
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nidaros and Sparebank is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nidaros Sparebank and Sparebank 1 SMN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SMN 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 Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SMN has no effect on the direction of Nidaros Sparebank i.e., Nidaros Sparebank and Sparebank go up and down completely randomly.
Pair Corralation between Nidaros Sparebank and Sparebank
Assuming the 90 days trading horizon Nidaros Sparebank is expected to under-perform the Sparebank. But the stock apears to be less risky and, when comparing its historical volatility, Nidaros Sparebank is 1.71 times less risky than Sparebank. The stock trades about -0.24 of its potential returns per unit of risk. The Sparebank 1 SMN is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 16,460 in Sparebank 1 SMN on August 24, 2024 and sell it today you would earn a total of 40.00 from holding Sparebank 1 SMN or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nidaros Sparebank vs. Sparebank 1 SMN
Performance |
| Timeline |
| Nidaros Sparebank |
| Sparebank 1 SMN |
Nidaros Sparebank and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nidaros Sparebank and Sparebank
The main advantage of trading using opposite Nidaros Sparebank and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nidaros Sparebank position performs unexpectedly, 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 Sparebank will offset losses from the drop in Sparebank's long position.| Nidaros Sparebank vs. DnB ASA | Nidaros Sparebank vs. Sparebank 1 SR | Nidaros Sparebank vs. Sparebank 1 SMN | Nidaros Sparebank vs. Sparebanken Mre |
| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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