Correlation Between Skue Sparebank and Nidaros Sparebank
Can any of the company-specific risk be diversified away by investing in both Skue Sparebank and Nidaros 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 Nidaros 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 Nidaros Sparebank, you can compare the effects of market volatilities on Skue Sparebank and Nidaros 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 Nidaros Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skue Sparebank and Nidaros Sparebank.
Diversification Opportunities for Skue Sparebank and Nidaros Sparebank
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Skue and Nidaros is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Skue Sparebank and Nidaros Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidaros Sparebank 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 Nidaros Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidaros Sparebank has no effect on the direction of Skue Sparebank i.e., Skue Sparebank and Nidaros Sparebank go up and down completely randomly.
Pair Corralation between Skue Sparebank and Nidaros Sparebank
Assuming the 90 days trading horizon Skue Sparebank is expected to generate 2.74 times more return on investment than Nidaros Sparebank. However, Skue Sparebank is 2.74 times more volatile than Nidaros Sparebank. It trades about 0.04 of its potential returns per unit of risk. Nidaros Sparebank is currently generating about -0.36 per unit of risk. If you would invest 25,300 in Skue Sparebank on August 28, 2024 and sell it today you would earn a total of 200.00 from holding Skue Sparebank or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skue Sparebank vs. Nidaros Sparebank
Performance |
| Timeline |
| Skue Sparebank |
| Nidaros Sparebank |
Skue Sparebank and Nidaros Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skue Sparebank and Nidaros Sparebank
The main advantage of trading using opposite Skue Sparebank and Nidaros Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skue Sparebank position performs unexpectedly, Nidaros 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 Nidaros Sparebank will offset losses from the drop in Nidaros Sparebank's long position.The idea behind Skue Sparebank and Nidaros Sparebank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nidaros Sparebank vs. DnB ASA | Nidaros Sparebank vs. Sparebank 1 SR | Nidaros Sparebank vs. Sparebank 1 SMN | Nidaros Sparebank vs. Sparebanken Mre |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |