Correlation Between Sparebank and Totens Sparebank
Can any of the company-specific risk be diversified away by investing in both Sparebank and Totens 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 Sparebank and Totens Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 Nord Norge and Totens Sparebank, you can compare the effects of market volatilities on Sparebank and Totens 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 Sparebank with a short position of Totens Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Totens Sparebank.
Diversification Opportunities for Sparebank and Totens Sparebank
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sparebank and Totens is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 Nord Norge and Totens Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Totens Sparebank and 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 Sparebank 1 Nord Norge are associated (or correlated) with Totens Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Totens Sparebank has no effect on the direction of Sparebank i.e., Sparebank and Totens Sparebank go up and down completely randomly.
Pair Corralation between Sparebank and Totens Sparebank
Assuming the 90 days trading horizon Sparebank 1 Nord Norge is expected to under-perform the Totens Sparebank. But the stock apears to be less risky and, when comparing its historical volatility, Sparebank 1 Nord Norge is 1.09 times less risky than Totens Sparebank. The stock trades about 0.0 of its potential returns per unit of risk. The Totens Sparebank is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 28,100 in Totens Sparebank on August 29, 2024 and sell it today you would earn a total of 900.00 from holding Totens Sparebank or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 31.82% |
| Values | Daily Returns |
Sparebank 1 Nord Norge vs. Totens Sparebank
Performance |
| Timeline |
| Sparebank 1 Nord |
| Totens Sparebank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Sparebank and Totens Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Totens Sparebank
The main advantage of trading using opposite Sparebank and Totens Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Totens 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 Totens Sparebank will offset losses from the drop in Totens Sparebank's long position.| Sparebank vs. Sparebank 1 SMN | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. SpareBank 1 stlandet |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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