Correlation Between Skue Sparebank and Bien Sparebank
Can any of the company-specific risk be diversified away by investing in both Skue Sparebank and Bien 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 Skue Sparebank and Bien Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skue Sparebank and Bien Sparebank ASA, you can compare the effects of market volatilities on Skue Sparebank and Bien 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 Skue Sparebank with a short position of Bien Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skue Sparebank and Bien Sparebank.
Diversification Opportunities for Skue Sparebank and Bien Sparebank
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Skue and Bien is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Skue Sparebank and Bien Sparebank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bien Sparebank ASA and Skue 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 Skue Sparebank are associated (or correlated) with Bien Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bien Sparebank ASA has no effect on the direction of Skue Sparebank i.e., Skue Sparebank and Bien Sparebank go up and down completely randomly.
Pair Corralation between Skue Sparebank and Bien Sparebank
Assuming the 90 days trading horizon Skue Sparebank is expected to generate 0.42 times more return on investment than Bien Sparebank. However, Skue Sparebank is 2.38 times less risky than Bien Sparebank. It trades about 0.64 of its potential returns per unit of risk. Bien Sparebank ASA is currently generating about 0.19 per unit of risk. If you would invest 30,000 in Skue Sparebank on November 27, 2024 and sell it today you would earn a total of 5,060 from holding Skue Sparebank or generate 16.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skue Sparebank vs. Bien Sparebank ASA
Performance |
| Timeline |
| Skue Sparebank |
| Bien Sparebank ASA |
Skue Sparebank and Bien Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skue Sparebank and Bien Sparebank
The main advantage of trading using opposite Skue Sparebank and Bien Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skue Sparebank position performs unexpectedly, Bien 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 Bien Sparebank will offset losses from the drop in Bien Sparebank's long position.| Skue Sparebank vs. Melhus Sparebank | Skue Sparebank vs. Sparebanken Ost | Skue Sparebank vs. Sparebanken Sor |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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