Correlation Between SpareBank and Archer
Can any of the company-specific risk be diversified away by investing in both SpareBank and Archer 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 SpareBank and Archer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SpareBank 1 stlandet and Archer Limited, you can compare the effects of market volatilities on SpareBank and Archer 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 SpareBank with a short position of Archer. Check out your portfolio center. Please also check ongoing floating volatility patterns of SpareBank and Archer.
Diversification Opportunities for SpareBank and Archer
Very poor diversification
The 3 months correlation between SpareBank and Archer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SpareBank 1 stlandet and Archer Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Limited and SpareBank 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 SpareBank 1 stlandet are associated (or correlated) with Archer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Limited has no effect on the direction of SpareBank i.e., SpareBank and Archer go up and down completely randomly.
Pair Corralation between SpareBank and Archer
Assuming the 90 days trading horizon SpareBank 1 stlandet is expected to generate 0.41 times more return on investment than Archer. However, SpareBank 1 stlandet is 2.44 times less risky than Archer. It trades about 0.25 of its potential returns per unit of risk. Archer Limited is currently generating about 0.04 per unit of risk. If you would invest 15,724 in SpareBank 1 stlandet on November 3, 2024 and sell it today you would earn a total of 980.00 from holding SpareBank 1 stlandet or generate 6.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SpareBank 1 stlandet vs. Archer Limited
Performance |
| Timeline |
| SpareBank 1 stlandet |
| Archer Limited |
SpareBank and Archer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SpareBank and Archer
The main advantage of trading using opposite SpareBank and Archer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SpareBank position performs unexpectedly, Archer 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 Archer will offset losses from the drop in Archer's long position.| SpareBank vs. Sparebank 1 SMN | SpareBank vs. Sparebank 1 Nord Norge | SpareBank vs. Sparebanken Vest | SpareBank vs. Pareto Bank ASA |
| Archer vs. Golden Energy Offshore | Archer vs. Jaeren Sparebank | Archer vs. Nidaros Sparebank | Archer vs. Dolphin Drilling 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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