Correlation Between Sparebank and Grong Sparebank
Can any of the company-specific risk be diversified away by investing in both 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 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 Sparebank 1 Ostfold and Grong Sparebank, you can compare the effects of market volatilities on 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 Sparebank with a short position of Grong Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Grong Sparebank.
Diversification Opportunities for Sparebank and Grong Sparebank
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sparebank and Grong is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 Ostfold and Grong Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grong Sparebank and 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 Sparebank 1 Ostfold 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 Sparebank i.e., Sparebank and Grong Sparebank go up and down completely randomly.
Pair Corralation between Sparebank and Grong Sparebank
Assuming the 90 days trading horizon Sparebank 1 Ostfold is expected to generate 1.19 times more return on investment than Grong Sparebank. However, Sparebank is 1.19 times more volatile than Grong Sparebank. It trades about 0.04 of its potential returns per unit of risk. Grong Sparebank is currently generating about 0.01 per unit of risk. If you would invest 36,400 in Sparebank 1 Ostfold on September 2, 2024 and sell it today you would earn a total of 1,100 from holding Sparebank 1 Ostfold or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 Ostfold vs. Grong Sparebank
Performance |
| Timeline |
| Sparebank 1 Ostfold |
| Grong Sparebank |
Sparebank and Grong Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Grong Sparebank
The main advantage of trading using opposite Sparebank and Grong Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 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.| Sparebank vs. DnB ASA | Sparebank vs. Gjensidige Forsikring ASA | Sparebank vs. Orkla ASA | Sparebank vs. Telenor ASA |
| Grong Sparebank vs. Sparebank 1 SMN | Grong Sparebank vs. Sparebank 1 Nord Norge | Grong Sparebank vs. Sparebanken Vest | Grong Sparebank vs. Sparebank 1 Ostfold |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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