Correlation Between Spar Nord and Erria AS
Can any of the company-specific risk be diversified away by investing in both Spar Nord and Erria AS 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 Erria AS 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 Erria AS, you can compare the effects of market volatilities on Spar Nord and Erria AS 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 Erria AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spar Nord and Erria AS.
Diversification Opportunities for Spar Nord and Erria AS
Excellent diversification
The 3 months correlation between Spar and Erria is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Spar Nord Bank and Erria AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erria AS 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 Erria AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erria AS has no effect on the direction of Spar Nord i.e., Spar Nord and Erria AS go up and down completely randomly.
Pair Corralation between Spar Nord and Erria AS
Assuming the 90 days trading horizon Spar Nord Bank is expected to generate 0.53 times more return on investment than Erria AS. However, Spar Nord Bank is 1.89 times less risky than Erria AS. It trades about 0.1 of its potential returns per unit of risk. Erria AS is currently generating about 0.0 per unit of risk. If you would invest 9,611 in Spar Nord Bank on September 2, 2024 and sell it today you would earn a total of 4,309 from holding Spar Nord Bank or generate 44.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spar Nord Bank vs. Erria AS
Performance |
| Timeline |
| Spar Nord Bank |
| Erria AS |
Spar Nord and Erria AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spar Nord and Erria AS
The main advantage of trading using opposite Spar Nord and Erria AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spar Nord position performs unexpectedly, Erria AS 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 Erria AS will offset losses from the drop in Erria AS's long position.| Spar Nord vs. Sydbank AS | Spar Nord vs. Jyske Bank AS | Spar Nord vs. Alm Brand | Spar Nord vs. Nordea Bank Abp |
| Erria AS vs. Scandinavian Tobacco Group | Erria AS vs. Jyske Bank AS | Erria AS vs. Dataproces Group AS | Erria AS vs. Spar Nord Bank |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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