Correlation Between Sparebank and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both Sparebank and Telenor 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 Telenor ASA 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 Telenor ASA, you can compare the effects of market volatilities on Sparebank and Telenor 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Telenor ASA.
Diversification Opportunities for Sparebank and Telenor ASA
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sparebank and Telenor is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor 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 SR are associated (or correlated) with Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of Sparebank i.e., Sparebank and Telenor ASA go up and down completely randomly.
Pair Corralation between Sparebank and Telenor ASA
Assuming the 90 days trading horizon Sparebank 1 SR is expected to generate 1.21 times more return on investment than Telenor ASA. However, Sparebank is 1.21 times more volatile than Telenor ASA. It trades about 0.05 of its potential returns per unit of risk. Telenor ASA is currently generating about 0.05 per unit of risk. If you would invest 13,420 in Sparebank 1 SR on August 31, 2024 and sell it today you would earn a total of 1,000.00 from holding Sparebank 1 SR or generate 7.45% 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. Telenor ASA
Performance |
| Timeline |
| Sparebank 1 SR |
| Telenor ASA |
Sparebank and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Telenor ASA
The main advantage of trading using opposite Sparebank and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Telenor 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.| Sparebank vs. DnB ASA | Sparebank vs. Gjensidige Forsikring ASA | Sparebank vs. Orkla ASA | Sparebank vs. Telenor ASA |
| Telenor ASA vs. Orkla ASA | Telenor ASA vs. DnB ASA | Telenor ASA vs. Yara International ASA | Telenor ASA vs. Storebrand 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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