Correlation Between North Energy and Skue Sparebank
Can any of the company-specific risk be diversified away by investing in both North Energy and Skue 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 North Energy and Skue Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Energy ASA and Skue Sparebank, you can compare the effects of market volatilities on North Energy and Skue 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 North Energy with a short position of Skue Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Energy and Skue Sparebank.
Diversification Opportunities for North Energy and Skue Sparebank
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between North and Skue is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding North Energy ASA and Skue Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skue Sparebank and North Energy 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 North Energy ASA are associated (or correlated) with Skue Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skue Sparebank has no effect on the direction of North Energy i.e., North Energy and Skue Sparebank go up and down completely randomly.
Pair Corralation between North Energy and Skue Sparebank
Assuming the 90 days trading horizon North Energy ASA is expected to generate 1.73 times more return on investment than Skue Sparebank. However, North Energy is 1.73 times more volatile than Skue Sparebank. It trades about 0.07 of its potential returns per unit of risk. Skue Sparebank is currently generating about 0.05 per unit of risk. If you would invest 224.00 in North Energy ASA on September 3, 2024 and sell it today you would earn a total of 46.00 from holding North Energy ASA or generate 20.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Energy ASA vs. Skue Sparebank
Performance |
| Timeline |
| North Energy ASA |
| Skue Sparebank |
North Energy and Skue Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Energy and Skue Sparebank
The main advantage of trading using opposite North Energy and Skue Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Energy position performs unexpectedly, Skue 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 Skue Sparebank will offset losses from the drop in Skue Sparebank's long position.| North Energy vs. Nidaros Sparebank | North Energy vs. Lea Bank ASA | North Energy vs. Morrow Bank ASA | North Energy vs. Melhus Sparebank |
| Skue Sparebank vs. Melhus Sparebank | Skue Sparebank vs. Sparebanken Ost | Skue Sparebank vs. Sparebanken Sor |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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