Correlation Between SpareBank and Morrow Bank
Can any of the company-specific risk be diversified away by investing in both SpareBank and Morrow 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 SpareBank and Morrow Bank 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 Morrow Bank ASA, you can compare the effects of market volatilities on SpareBank and Morrow 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 SpareBank with a short position of Morrow Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SpareBank and Morrow Bank.
Diversification Opportunities for SpareBank and Morrow Bank
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SpareBank and Morrow is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SpareBank 1 stlandet and Morrow Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morrow Bank ASA 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 Morrow Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morrow Bank ASA has no effect on the direction of SpareBank i.e., SpareBank and Morrow Bank go up and down completely randomly.
Pair Corralation between SpareBank and Morrow Bank
Assuming the 90 days trading horizon SpareBank 1 stlandet is expected to under-perform the Morrow Bank. But the stock apears to be less risky and, when comparing its historical volatility, SpareBank 1 stlandet is 1.42 times less risky than Morrow Bank. The stock trades about -0.07 of its potential returns per unit of risk. The Morrow Bank ASA is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest 638.00 in Morrow Bank ASA on August 29, 2024 and sell it today you would earn a total of 222.00 from holding Morrow Bank ASA or generate 34.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SpareBank 1 stlandet vs. Morrow Bank ASA
Performance |
| Timeline |
| SpareBank 1 stlandet |
| Morrow Bank ASA |
SpareBank and Morrow Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SpareBank and Morrow Bank
The main advantage of trading using opposite SpareBank and Morrow Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SpareBank position performs unexpectedly, Morrow 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 Morrow Bank will offset losses from the drop in Morrow Bank's long position.| SpareBank vs. Sparebank 1 SMN | SpareBank vs. Sparebank 1 Nord Norge | SpareBank vs. Sparebanken Vest | SpareBank vs. Sparebank 1 SR |
| Morrow Bank vs. Nidaros Sparebank | Morrow Bank vs. SpareBank 1 stlandet | Morrow Bank vs. Bien Sparebank ASA | Morrow Bank vs. Aurskog Sparebank |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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