Correlation Between Spar Nord and Sparekassen Sjaelland
Can any of the company-specific risk be diversified away by investing in both Spar Nord and Sparekassen Sjaelland 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 Sparekassen Sjaelland 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 Sparekassen Sjaelland Fyn AS, you can compare the effects of market volatilities on Spar Nord and Sparekassen Sjaelland 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 Sparekassen Sjaelland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spar Nord and Sparekassen Sjaelland.
Diversification Opportunities for Spar Nord and Sparekassen Sjaelland
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Spar and Sparekassen is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Spar Nord Bank and Sparekassen Sjaelland Fyn AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparekassen Sjaelland 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 Sparekassen Sjaelland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparekassen Sjaelland has no effect on the direction of Spar Nord i.e., Spar Nord and Sparekassen Sjaelland go up and down completely randomly.
Pair Corralation between Spar Nord and Sparekassen Sjaelland
Assuming the 90 days trading horizon Spar Nord is expected to generate 21.06 times less return on investment than Sparekassen Sjaelland. But when comparing it to its historical volatility, Spar Nord Bank is 5.51 times less risky than Sparekassen Sjaelland. It trades about 0.11 of its potential returns per unit of risk. Sparekassen Sjaelland Fyn AS is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 26,000 in Sparekassen Sjaelland Fyn AS on November 27, 2024 and sell it today you would earn a total of 2,750 from holding Sparekassen Sjaelland Fyn AS or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spar Nord Bank vs. Sparekassen Sjaelland Fyn AS
Performance |
| Timeline |
| Spar Nord Bank |
| Sparekassen Sjaelland |
Spar Nord and Sparekassen Sjaelland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spar Nord and Sparekassen Sjaelland
The main advantage of trading using opposite Spar Nord and Sparekassen Sjaelland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spar Nord position performs unexpectedly, Sparekassen Sjaelland 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 Sparekassen Sjaelland will offset losses from the drop in Sparekassen Sjaelland'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 |
| Sparekassen Sjaelland vs. Sydbank AS | Sparekassen Sjaelland vs. Spar Nord Bank | Sparekassen Sjaelland vs. Per Aarsleff Holding | Sparekassen Sjaelland vs. Vestjysk Bank 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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