Correlation Between Sparebanken Ost and Sogn Sparebank
Can any of the company-specific risk be diversified away by investing in both Sparebanken Ost and Sogn Sparebank 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 Sparebanken Ost and Sogn Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Ost and Sogn Sparebank, you can compare the effects of market volatilities on Sparebanken Ost and Sogn Sparebank 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 Sparebanken Ost with a short position of Sogn Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Ost and Sogn Sparebank.
Diversification Opportunities for Sparebanken Ost and Sogn Sparebank
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sparebanken and Sogn is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Ost and Sogn Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sogn Sparebank and Sparebanken Ost 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 Sparebanken Ost are associated (or correlated) with Sogn Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sogn Sparebank has no effect on the direction of Sparebanken Ost i.e., Sparebanken Ost and Sogn Sparebank go up and down completely randomly.
Pair Corralation between Sparebanken Ost and Sogn Sparebank
Assuming the 90 days trading horizon Sparebanken Ost is expected to generate 3.07 times less return on investment than Sogn Sparebank. But when comparing it to its historical volatility, Sparebanken Ost is 5.2 times less risky than Sogn Sparebank. It trades about 0.33 of its potential returns per unit of risk. Sogn Sparebank is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 24,795 in Sogn Sparebank on November 2, 2024 and sell it today you would earn a total of 4,105 from holding Sogn Sparebank or generate 16.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebanken Ost vs. Sogn Sparebank
Performance |
| Timeline |
| Sparebanken Ost |
| Sogn Sparebank |
Sparebanken Ost and Sogn Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Ost and Sogn Sparebank
The main advantage of trading using opposite Sparebanken Ost and Sogn Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Ost position performs unexpectedly, Sogn Sparebank 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 Sogn Sparebank will offset losses from the drop in Sogn Sparebank's long position.| Sparebanken Ost vs. Odfjell Drilling | Sparebanken Ost vs. Clean Seas Seafood | Sparebanken Ost vs. Morrow Bank ASA | Sparebanken Ost vs. Proximar Seafood AS |
| Sogn Sparebank vs. Sparebanken Sor | Sogn Sparebank vs. SpareBank 1 stlandet | Sogn Sparebank vs. Holand og Setskog | Sogn Sparebank vs. Sparebank 1 Ringerike |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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