Correlation Between Roebuck Food and Sparebank
Can any of the company-specific risk be diversified away by investing in both Roebuck Food 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 Roebuck Food and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roebuck Food Group and Sparebank 1 SR, you can compare the effects of market volatilities on Roebuck Food 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 Roebuck Food with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roebuck Food and Sparebank.
Diversification Opportunities for Roebuck Food and Sparebank
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Roebuck and Sparebank is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Roebuck Food Group and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR and Roebuck Food 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 Roebuck Food Group 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 SR has no effect on the direction of Roebuck Food i.e., Roebuck Food and Sparebank go up and down completely randomly.
Pair Corralation between Roebuck Food and Sparebank
Assuming the 90 days trading horizon Roebuck Food is expected to generate 1.07 times less return on investment than Sparebank. In addition to that, Roebuck Food is 1.26 times more volatile than Sparebank 1 SR. It trades about 0.06 of its total potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.08 per unit of volatility. If you would invest 11,869 in Sparebank 1 SR on September 14, 2024 and sell it today you would earn a total of 2,671 from holding Sparebank 1 SR or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Roebuck Food Group vs. Sparebank 1 SR
Performance |
| Timeline |
| Roebuck Food Group |
| Sparebank 1 SR |
Roebuck Food and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roebuck Food and Sparebank
The main advantage of trading using opposite Roebuck Food and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roebuck Food 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.| Roebuck Food vs. Berkshire Hathaway | Roebuck Food vs. Chocoladefabriken Lindt Spruengli | Roebuck Food vs. Toyota Motor Corp | Roebuck Food vs. Johnson Matthey PLC |
| Sparebank vs. Porvair plc | Sparebank vs. GreenX Metals | Sparebank vs. Morgan Advanced Materials | Sparebank vs. Metals Exploration Plc |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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