Correlation Between Sparebanken Sor and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Sparebanken Sor and Norsk Hydro 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 Sparebanken Sor and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Sor and Norsk Hydro ASA, you can compare the effects of market volatilities on Sparebanken Sor and Norsk Hydro 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 Sparebanken Sor with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Sor and Norsk Hydro.
Diversification Opportunities for Sparebanken Sor and Norsk Hydro
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sparebanken and Norsk is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Sor and Norsk Hydro ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsk Hydro ASA and Sparebanken Sor 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 Sparebanken Sor are associated (or correlated) with Norsk Hydro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsk Hydro ASA has no effect on the direction of Sparebanken Sor i.e., Sparebanken Sor and Norsk Hydro go up and down completely randomly.
Pair Corralation between Sparebanken Sor and Norsk Hydro
Assuming the 90 days trading horizon Sparebanken Sor is expected to generate 0.91 times more return on investment than Norsk Hydro. However, Sparebanken Sor is 1.09 times less risky than Norsk Hydro. It trades about 0.11 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.03 per unit of risk. If you would invest 14,980 in Sparebanken Sor on August 28, 2024 and sell it today you would earn a total of 3,954 from holding Sparebanken Sor or generate 26.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebanken Sor vs. Norsk Hydro ASA
Performance |
| Timeline |
| Sparebanken Sor |
| Norsk Hydro ASA |
Sparebanken Sor and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Sor and Norsk Hydro
The main advantage of trading using opposite Sparebanken Sor and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Sor position performs unexpectedly, Norsk Hydro 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 Norsk Hydro will offset losses from the drop in Norsk Hydro's long position.| Sparebanken Sor vs. Sparebanken Vest | Sparebanken Sor vs. Sparebank 1 Nord Norge | Sparebanken Sor vs. Sparebank 1 SMN | Sparebanken Sor vs. Sparebanken Ost |
| Norsk Hydro vs. Goodtech | Norsk Hydro vs. Havila Shipping ASA | Norsk Hydro vs. Eidesvik Offshore ASA | Norsk Hydro vs. Byggma |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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