Correlation Between SD Standard and Morrow Bank
Can any of the company-specific risk be diversified away by investing in both SD Standard and Morrow Bank 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 SD Standard and Morrow Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SD Standard Drilling and Morrow Bank ASA, you can compare the effects of market volatilities on SD Standard and Morrow Bank 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 SD Standard with a short position of Morrow Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SD Standard and Morrow Bank.
Diversification Opportunities for SD Standard and Morrow Bank
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SDSD and Morrow is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SD Standard Drilling and Morrow Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morrow Bank ASA and SD Standard 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 SD Standard Drilling are associated (or correlated) with Morrow Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morrow Bank ASA has no effect on the direction of SD Standard i.e., SD Standard and Morrow Bank go up and down completely randomly.
Pair Corralation between SD Standard and Morrow Bank
Assuming the 90 days trading horizon SD Standard is expected to generate 87.44 times less return on investment than Morrow Bank. But when comparing it to its historical volatility, SD Standard Drilling is 3.31 times less risky than Morrow Bank. It trades about 0.0 of its potential returns per unit of risk. Morrow Bank ASA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 910.00 in Morrow Bank ASA on November 3, 2024 and sell it today you would earn a total of 26.00 from holding Morrow Bank ASA or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SD Standard Drilling vs. Morrow Bank ASA
Performance |
| Timeline |
| SD Standard Drilling |
| Morrow Bank ASA |
SD Standard and Morrow Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SD Standard and Morrow Bank
The main advantage of trading using opposite SD Standard and Morrow Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SD Standard position performs unexpectedly, Morrow Bank 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 Morrow Bank will offset losses from the drop in Morrow Bank's long position.| SD Standard vs. Odfjell Drilling | SD Standard vs. Solstad Offsho | SD Standard vs. Reach Subsea | SD Standard vs. Eidesvik Offshore ASA |
| Morrow Bank vs. Aurskog Sparebank | Morrow Bank vs. Grong Sparebank | Morrow Bank vs. Romsdal Sparebank | Morrow Bank vs. SD Standard Drilling |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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