Correlation Between Spar Nord and Skjern Bank
Can any of the company-specific risk be diversified away by investing in both Spar Nord and Skjern Bank 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 Skjern Bank 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 Skjern Bank AS, you can compare the effects of market volatilities on Spar Nord and Skjern Bank 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 Skjern Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spar Nord and Skjern Bank.
Diversification Opportunities for Spar Nord and Skjern Bank
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Spar and Skjern is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Spar Nord Bank and Skjern Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skjern Bank 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 Skjern Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skjern Bank AS has no effect on the direction of Spar Nord i.e., Spar Nord and Skjern Bank go up and down completely randomly.
Pair Corralation between Spar Nord and Skjern Bank
Assuming the 90 days trading horizon Spar Nord is expected to generate 9.07 times less return on investment than Skjern Bank. But when comparing it to its historical volatility, Spar Nord Bank is 5.58 times less risky than Skjern Bank. It trades about 0.11 of its potential returns per unit of risk. Skjern Bank AS is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 19,550 in Skjern Bank AS on November 27, 2024 and sell it today you would earn a total of 850.00 from holding Skjern Bank AS or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spar Nord Bank vs. Skjern Bank AS
Performance |
| Timeline |
| Spar Nord Bank |
| Skjern Bank AS |
Spar Nord and Skjern Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spar Nord and Skjern Bank
The main advantage of trading using opposite Spar Nord and Skjern Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spar Nord position performs unexpectedly, Skjern Bank 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 Skjern Bank will offset losses from the drop in Skjern Bank'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 |
| Skjern Bank vs. Nordinvestments AS | Skjern Bank vs. BankIn Bredygt Klimaakt | Skjern Bank vs. FOM Technologies AS | Skjern Bank vs. NTG Nordic Transport |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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