Correlation Between Skue Sparebank and Pareto Bank
Can any of the company-specific risk be diversified away by investing in both Skue Sparebank and Pareto 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 Skue Sparebank and Pareto Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skue Sparebank and Pareto Bank ASA, you can compare the effects of market volatilities on Skue Sparebank and Pareto 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 Skue Sparebank with a short position of Pareto Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skue Sparebank and Pareto Bank.
Diversification Opportunities for Skue Sparebank and Pareto Bank
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Skue and Pareto is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Skue Sparebank and Pareto Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pareto Bank 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 Pareto Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pareto Bank ASA has no effect on the direction of Skue Sparebank i.e., Skue Sparebank and Pareto Bank go up and down completely randomly.
Pair Corralation between Skue Sparebank and Pareto Bank
Assuming the 90 days trading horizon Skue Sparebank is expected to generate 1.08 times more return on investment than Pareto Bank. However, Skue Sparebank is 1.08 times more volatile than Pareto Bank ASA. It trades about 0.12 of its potential returns per unit of risk. Pareto Bank ASA is currently generating about 0.05 per unit of risk. If you would invest 25,000 in Skue Sparebank on August 31, 2024 and sell it today you would earn a total of 790.00 from holding Skue Sparebank or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skue Sparebank vs. Pareto Bank ASA
Performance |
| Timeline |
| Skue Sparebank |
| Pareto Bank ASA |
Skue Sparebank and Pareto Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skue Sparebank and Pareto Bank
The main advantage of trading using opposite Skue Sparebank and Pareto Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skue Sparebank position performs unexpectedly, Pareto 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 Pareto Bank will offset losses from the drop in Pareto Bank's long position.| Skue Sparebank vs. Melhus Sparebank | Skue Sparebank vs. Sparebanken Ost | Skue Sparebank vs. Sparebanken Sor |
| Pareto Bank vs. Sparebank 1 SMN | Pareto Bank vs. Storebrand ASA | Pareto Bank vs. DnB ASA | Pareto Bank vs. Europris ASA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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