Correlation Between SpareBank and Polight ASA
Can any of the company-specific risk be diversified away by investing in both SpareBank and Polight ASA 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 Polight ASA 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 Polight ASA, you can compare the effects of market volatilities on SpareBank and Polight ASA 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 Polight ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SpareBank and Polight ASA.
Diversification Opportunities for SpareBank and Polight ASA
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SpareBank and Polight is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SpareBank 1 stlandet and Polight ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polight 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 Polight ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polight ASA has no effect on the direction of SpareBank i.e., SpareBank and Polight ASA go up and down completely randomly.
Pair Corralation between SpareBank and Polight ASA
Assuming the 90 days trading horizon SpareBank 1 stlandet is expected to generate 0.43 times more return on investment than Polight ASA. However, SpareBank 1 stlandet is 2.33 times less risky than Polight ASA. It trades about -0.07 of its potential returns per unit of risk. Polight ASA is currently generating about -0.05 per unit of risk. If you would invest 15,366 in SpareBank 1 stlandet on August 29, 2024 and sell it today you would lose (440.00) from holding SpareBank 1 stlandet or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SpareBank 1 stlandet vs. Polight ASA
Performance |
| Timeline |
| SpareBank 1 stlandet |
| Polight ASA |
SpareBank and Polight ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SpareBank and Polight ASA
The main advantage of trading using opposite SpareBank and Polight ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SpareBank position performs unexpectedly, Polight ASA 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 Polight ASA will offset losses from the drop in Polight ASA's long position.| SpareBank vs. Sparebank 1 SMN | SpareBank vs. Sparebank 1 Nord Norge | SpareBank vs. Sparebanken Vest | SpareBank vs. Sparebank 1 SR |
| Polight ASA vs. Elliptic Laboratories AS | Polight ASA vs. Kongsberg Automotive Holding | Polight ASA vs. REC Silicon ASA |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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