Correlation Between Pareto Bank and Grong Sparebank
Can any of the company-specific risk be diversified away by investing in both Pareto Bank and Grong 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 Pareto Bank and Grong Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pareto Bank ASA and Grong Sparebank, you can compare the effects of market volatilities on Pareto Bank and Grong 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 Pareto Bank with a short position of Grong Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pareto Bank and Grong Sparebank.
Diversification Opportunities for Pareto Bank and Grong Sparebank
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pareto and Grong is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Pareto Bank ASA and Grong Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grong Sparebank and Pareto Bank 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 Pareto Bank ASA are associated (or correlated) with Grong Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grong Sparebank has no effect on the direction of Pareto Bank i.e., Pareto Bank and Grong Sparebank go up and down completely randomly.
Pair Corralation between Pareto Bank and Grong Sparebank
Assuming the 90 days trading horizon Pareto Bank ASA is expected to under-perform the Grong Sparebank. But the stock apears to be less risky and, when comparing its historical volatility, Pareto Bank ASA is 1.05 times less risky than Grong Sparebank. The stock trades about -0.13 of its potential returns per unit of risk. The Grong Sparebank is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14,700 in Grong Sparebank on September 15, 2024 and sell it today you would earn a total of 296.00 from holding Grong Sparebank or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pareto Bank ASA vs. Grong Sparebank
Performance |
| Timeline |
| Pareto Bank ASA |
| Grong Sparebank |
Pareto Bank and Grong Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pareto Bank and Grong Sparebank
The main advantage of trading using opposite Pareto Bank and Grong Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pareto Bank position performs unexpectedly, Grong 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 Grong Sparebank will offset losses from the drop in Grong Sparebank's long position.| Pareto Bank vs. Aurskog Sparebank | Pareto Bank vs. Helgeland Sparebank | Pareto Bank vs. Kongsberg Gruppen ASA | Pareto Bank vs. Napatech AS |
| Grong Sparebank vs. DnB ASA | Grong Sparebank vs. Sparebank 1 SMN | Grong Sparebank vs. Sparebanken Mre | Grong 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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