Correlation Between Nordic Mining and SpareBank
Can any of the company-specific risk be diversified away by investing in both Nordic Mining 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 Nordic Mining and SpareBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Mining ASA and SpareBank 1 stlandet, you can compare the effects of market volatilities on Nordic Mining 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 Nordic Mining with a short position of SpareBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Mining and SpareBank.
Diversification Opportunities for Nordic Mining and SpareBank
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and SpareBank is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Mining ASA and SpareBank 1 stlandet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpareBank 1 stlandet and Nordic Mining 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 Nordic Mining ASA 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 stlandet has no effect on the direction of Nordic Mining i.e., Nordic Mining and SpareBank go up and down completely randomly.
Pair Corralation between Nordic Mining and SpareBank
Assuming the 90 days trading horizon Nordic Mining ASA is expected to generate 1.77 times more return on investment than SpareBank. However, Nordic Mining is 1.77 times more volatile than SpareBank 1 stlandet. It trades about 0.05 of its potential returns per unit of risk. SpareBank 1 stlandet is currently generating about 0.07 per unit of risk. If you would invest 2,278 in Nordic Mining ASA on September 1, 2024 and sell it today you would earn a total of 263.00 from holding Nordic Mining ASA or generate 11.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Mining ASA vs. SpareBank 1 stlandet
Performance |
| Timeline |
| Nordic Mining ASA |
| SpareBank 1 stlandet |
Nordic Mining and SpareBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Mining and SpareBank
The main advantage of trading using opposite Nordic Mining and SpareBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Mining 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.| Nordic Mining vs. SpareBank 1 stlandet | Nordic Mining vs. Odfjell Drilling | Nordic Mining vs. BW Offshore | Nordic Mining vs. Dolphin Drilling AS |
| SpareBank vs. Sparebank 1 SMN | SpareBank vs. Sparebank 1 Nord Norge | SpareBank vs. Sparebanken Vest | SpareBank vs. Sparebank 1 SR |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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