Correlation Between Spar Nord and Ringkjoebing Landbobank
Can any of the company-specific risk be diversified away by investing in both Spar Nord and Ringkjoebing Landbobank 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 Ringkjoebing Landbobank 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 Ringkjoebing Landbobank AS, you can compare the effects of market volatilities on Spar Nord and Ringkjoebing Landbobank 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 Ringkjoebing Landbobank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spar Nord and Ringkjoebing Landbobank.
Diversification Opportunities for Spar Nord and Ringkjoebing Landbobank
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spar and Ringkjoebing is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Spar Nord Bank and Ringkjoebing Landbobank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ringkjoebing Landbobank 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 Ringkjoebing Landbobank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ringkjoebing Landbobank has no effect on the direction of Spar Nord i.e., Spar Nord and Ringkjoebing Landbobank go up and down completely randomly.
Pair Corralation between Spar Nord and Ringkjoebing Landbobank
Assuming the 90 days trading horizon Spar Nord Bank is expected to generate 1.26 times more return on investment than Ringkjoebing Landbobank. However, Spar Nord is 1.26 times more volatile than Ringkjoebing Landbobank AS. It trades about 0.06 of its potential returns per unit of risk. Ringkjoebing Landbobank AS is currently generating about 0.04 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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spar Nord Bank vs. Ringkjoebing Landbobank AS
Performance |
| Timeline |
| Spar Nord Bank |
| Ringkjoebing Landbobank |
Spar Nord and Ringkjoebing Landbobank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spar Nord and Ringkjoebing Landbobank
The main advantage of trading using opposite Spar Nord and Ringkjoebing Landbobank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spar Nord position performs unexpectedly, Ringkjoebing Landbobank 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 Ringkjoebing Landbobank will offset losses from the drop in Ringkjoebing Landbobank's long position.| Spar Nord vs. Dataproces Group AS | Spar Nord vs. cBrain AS | Spar Nord vs. ALK Abell AS | Spar Nord vs. ChemoMetec AS |
| Ringkjoebing Landbobank vs. Dataproces Group AS | Ringkjoebing Landbobank vs. cBrain AS | Ringkjoebing Landbobank vs. ALK Abell AS | Ringkjoebing Landbobank vs. ChemoMetec AS |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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