Correlation Between Sparebank and Jaeren Sparebank
Can any of the company-specific risk be diversified away by investing in both Sparebank and Jaeren 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 Sparebank and Jaeren Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 SR and Jaeren Sparebank, you can compare the effects of market volatilities on Sparebank and Jaeren 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 Sparebank with a short position of Jaeren Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Jaeren Sparebank.
Diversification Opportunities for Sparebank and Jaeren Sparebank
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sparebank and Jaeren is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and Jaeren Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaeren Sparebank 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 SR are associated (or correlated) with Jaeren Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaeren Sparebank has no effect on the direction of Sparebank i.e., Sparebank and Jaeren Sparebank go up and down completely randomly.
Pair Corralation between Sparebank and Jaeren Sparebank
Assuming the 90 days trading horizon Sparebank 1 SR is expected to generate 1.27 times more return on investment than Jaeren Sparebank. However, Sparebank is 1.27 times more volatile than Jaeren Sparebank. It trades about 0.04 of its potential returns per unit of risk. Jaeren Sparebank is currently generating about -0.08 per unit of risk. If you would invest 14,660 in Sparebank 1 SR on August 29, 2024 and sell it today you would earn a total of 120.00 from holding Sparebank 1 SR or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SR vs. Jaeren Sparebank
Performance |
| Timeline |
| Sparebank 1 SR |
| Jaeren Sparebank |
Sparebank and Jaeren Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Jaeren Sparebank
The main advantage of trading using opposite Sparebank and Jaeren Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Jaeren 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 Jaeren Sparebank will offset losses from the drop in Jaeren Sparebank's long position.The idea behind Sparebank 1 SR and Jaeren Sparebank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Jaeren Sparebank vs. DnB ASA | Jaeren Sparebank vs. Sparebank 1 SR | Jaeren Sparebank vs. Sparebank 1 SMN | Jaeren Sparebank vs. Sparebank 1 Ostfold |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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