Correlation Between Spar Nord and Sydbank AS
Can any of the company-specific risk be diversified away by investing in both Spar Nord and Sydbank 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 Sydbank 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 Sydbank AS, you can compare the effects of market volatilities on Spar Nord and Sydbank 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 Sydbank AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spar Nord and Sydbank AS.
Diversification Opportunities for Spar Nord and Sydbank AS
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Spar and Sydbank is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Spar Nord Bank and Sydbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank 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 Sydbank AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank AS has no effect on the direction of Spar Nord i.e., Spar Nord and Sydbank AS go up and down completely randomly.
Pair Corralation between Spar Nord and Sydbank AS
Assuming the 90 days trading horizon Spar Nord Bank is expected to generate 1.59 times more return on investment than Sydbank AS. However, Spar Nord is 1.59 times more volatile than Sydbank AS. It trades about 0.06 of its potential returns per unit of risk. Sydbank AS is currently generating about 0.04 per unit of risk. If you would invest 11,021 in Spar Nord Bank on November 9, 2024 and sell it today you would earn a total of 9,879 from holding Spar Nord Bank or generate 89.64% 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. Sydbank AS
Performance |
| Timeline |
| Spar Nord Bank |
| Sydbank AS |
Spar Nord and Sydbank AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spar Nord and Sydbank AS
The main advantage of trading using opposite Spar Nord and Sydbank AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spar Nord position performs unexpectedly, Sydbank 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 Sydbank AS will offset losses from the drop in Sydbank 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 |
| Sydbank AS vs. Jyske Bank AS | Sydbank AS vs. Tryg AS | Sydbank AS vs. FLSmidth Co | Sydbank AS vs. Nordea Bank Abp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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