Correlation Between Romsdal Sparebank and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both Romsdal Sparebank and Eidesvik Offshore 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 Romsdal Sparebank and Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Romsdal Sparebank and Eidesvik Offshore ASA, you can compare the effects of market volatilities on Romsdal Sparebank and Eidesvik Offshore 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 Romsdal Sparebank with a short position of Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Romsdal Sparebank and Eidesvik Offshore.
Diversification Opportunities for Romsdal Sparebank and Eidesvik Offshore
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Romsdal and Eidesvik is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Romsdal Sparebank and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA and Romsdal 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 Romsdal Sparebank are associated (or correlated) with Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of Romsdal Sparebank i.e., Romsdal Sparebank and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between Romsdal Sparebank and Eidesvik Offshore
Assuming the 90 days trading horizon Romsdal Sparebank is expected to generate 1.73 times less return on investment than Eidesvik Offshore. But when comparing it to its historical volatility, Romsdal Sparebank is 1.78 times less risky than Eidesvik Offshore. It trades about 0.02 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,182 in Eidesvik Offshore ASA on November 2, 2024 and sell it today you would earn a total of 158.00 from holding Eidesvik Offshore ASA or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Romsdal Sparebank vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| Romsdal Sparebank |
| Eidesvik Offshore ASA |
Romsdal Sparebank and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Romsdal Sparebank and Eidesvik Offshore
The main advantage of trading using opposite Romsdal Sparebank and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Romsdal Sparebank position performs unexpectedly, Eidesvik Offshore 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 Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.| Romsdal Sparebank vs. Instabank ASA | Romsdal Sparebank vs. Romerike Sparebank | Romsdal Sparebank vs. Nordic Semiconductor ASA | Romsdal Sparebank vs. Skue Sparebank |
| Eidesvik Offshore vs. Solstad Offsho | Eidesvik Offshore vs. Havila Shipping ASA | Eidesvik Offshore vs. Prosafe SE | Eidesvik Offshore vs. BW Offshore |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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