Correlation Between Odfjell Drilling and Jaeren Sparebank
Can any of the company-specific risk be diversified away by investing in both Odfjell Drilling and Jaeren 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 Odfjell Drilling and Jaeren Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Odfjell Drilling and Jaeren Sparebank, you can compare the effects of market volatilities on Odfjell Drilling and Jaeren 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 Odfjell Drilling with a short position of Jaeren Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell Drilling and Jaeren Sparebank.
Diversification Opportunities for Odfjell Drilling and Jaeren Sparebank
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Odfjell and Jaeren is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling and Jaeren Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaeren Sparebank and Odfjell Drilling 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 Odfjell Drilling are associated (or correlated) with Jaeren Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaeren Sparebank has no effect on the direction of Odfjell Drilling i.e., Odfjell Drilling and Jaeren Sparebank go up and down completely randomly.
Pair Corralation between Odfjell Drilling and Jaeren Sparebank
Assuming the 90 days trading horizon Odfjell Drilling is expected to generate 2.03 times more return on investment than Jaeren Sparebank. However, Odfjell Drilling is 2.03 times more volatile than Jaeren Sparebank. It trades about 0.23 of its potential returns per unit of risk. Jaeren Sparebank is currently generating about 0.19 per unit of risk. If you would invest 5,060 in Odfjell Drilling on October 26, 2024 and sell it today you would earn a total of 1,150 from holding Odfjell Drilling or generate 22.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Odfjell Drilling vs. Jaeren Sparebank
Performance |
| Timeline |
| Odfjell Drilling |
| Jaeren Sparebank |
Odfjell Drilling and Jaeren Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Odfjell Drilling and Jaeren Sparebank
The main advantage of trading using opposite Odfjell Drilling and Jaeren Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odfjell Drilling position performs unexpectedly, Jaeren 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 Jaeren Sparebank will offset losses from the drop in Jaeren Sparebank's long position.| Odfjell Drilling vs. Shelf Drilling | Odfjell Drilling vs. BW Offshore | Odfjell Drilling vs. Subsea 7 SA | Odfjell Drilling vs. Elkem ASA |
| Jaeren Sparebank vs. DnB ASA | Jaeren Sparebank vs. Sparebank 1 SMN | Jaeren Sparebank vs. Sparebanken Mre | Jaeren Sparebank vs. Sparebank 1 Ostfold |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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