Correlation Between Spar Nord and BankInv GloAkColum

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Can any of the company-specific risk be diversified away by investing in both Spar Nord and BankInv GloAkColum 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 Spar Nord and BankInv GloAkColum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spar Nord Bank and BankInv GloAkColum Threadndl, you can compare the effects of market volatilities on Spar Nord and BankInv GloAkColum 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 Spar Nord with a short position of BankInv GloAkColum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spar Nord and BankInv GloAkColum.

Diversification Opportunities for Spar Nord and BankInv GloAkColum

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Spar and BankInv is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Spar Nord Bank and BankInv GloAkColum Threadndl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInv GloAkColum and Spar Nord 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 Spar Nord Bank are associated (or correlated) with BankInv GloAkColum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInv GloAkColum has no effect on the direction of Spar Nord i.e., Spar Nord and BankInv GloAkColum go up and down completely randomly.

Pair Corralation between Spar Nord and BankInv GloAkColum

Assuming the 90 days trading horizon Spar Nord Bank is expected to generate 1.93 times more return on investment than BankInv GloAkColum. However, Spar Nord is 1.93 times more volatile than BankInv GloAkColum Threadndl. It trades about 0.06 of its potential returns per unit of risk. BankInv GloAkColum Threadndl is currently generating about 0.07 per unit of risk. If you would invest  9,202  in Spar Nord Bank on August 25, 2024 and sell it today you would earn a total of  4,438  from holding Spar Nord Bank or generate 48.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy32.6%
ValuesDaily Returns

Spar Nord Bank  vs.  BankInv GloAkColum Threadndl

 Performance 
       Timeline  
Spar Nord Bank 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Spar Nord Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Spar Nord is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
BankInv GloAkColum 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BankInv GloAkColum Threadndl are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, BankInv GloAkColum may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Spar Nord and BankInv GloAkColum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Spar Nord and BankInv GloAkColum

The main advantage of trading using opposite Spar Nord and BankInv GloAkColum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spar Nord position performs unexpectedly, BankInv GloAkColum 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 BankInv GloAkColum will offset losses from the drop in BankInv GloAkColum's long position.
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The idea behind Spar Nord Bank and BankInv GloAkColum Threadndl 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.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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