Correlation Between Romsdal Sparebank and Grong Sparebank
Can any of the company-specific risk be diversified away by investing in both Romsdal Sparebank 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 Romsdal Sparebank and Grong Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Romsdal Sparebank and Grong Sparebank, you can compare the effects of market volatilities on Romsdal Sparebank 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 Romsdal Sparebank with a short position of Grong Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Romsdal Sparebank and Grong Sparebank.
Diversification Opportunities for Romsdal Sparebank and Grong Sparebank
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Romsdal and Grong is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Romsdal Sparebank and Grong Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grong Sparebank 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 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 Romsdal Sparebank i.e., Romsdal Sparebank and Grong Sparebank go up and down completely randomly.
Pair Corralation between Romsdal Sparebank and Grong Sparebank
Assuming the 90 days trading horizon Romsdal Sparebank is expected to under-perform the Grong Sparebank. But the stock apears to be less risky and, when comparing its historical volatility, Romsdal Sparebank is 1.9 times less risky than Grong Sparebank. The stock trades about -0.14 of its potential returns per unit of risk. The Grong Sparebank is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 15,000 in Grong Sparebank on September 1, 2024 and sell it today you would lose (4.00) from holding Grong Sparebank or give up 0.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Romsdal Sparebank vs. Grong Sparebank
Performance |
| Timeline |
| Romsdal Sparebank |
| Grong Sparebank |
Romsdal Sparebank and Grong Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Romsdal Sparebank and Grong Sparebank
The main advantage of trading using opposite Romsdal Sparebank and Grong Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Romsdal Sparebank 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.| Romsdal Sparebank vs. Proximar Seafood AS | Romsdal Sparebank vs. Norwegian Air Shuttle | Romsdal Sparebank vs. Lery Seafood Group | Romsdal Sparebank vs. NorAm Drilling AS |
| Grong Sparebank vs. Odfjell Drilling | Grong Sparebank vs. Sparebank 1 SMN | Grong Sparebank vs. Norwegian Air Shuttle | Grong Sparebank vs. Dolphin Drilling AS |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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