Correlation Between Storebrand ASA and Sparebank
Can any of the company-specific risk be diversified away by investing in both Storebrand ASA and 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 Storebrand ASA and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Storebrand ASA and Sparebank 1 Nord Norge, you can compare the effects of market volatilities on Storebrand ASA and 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 Storebrand ASA with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Storebrand ASA and Sparebank.
Diversification Opportunities for Storebrand ASA and Sparebank
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Storebrand and Sparebank is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Storebrand ASA and Sparebank 1 Nord Norge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 Nord and Storebrand ASA 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 Storebrand ASA are associated (or correlated) with Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 Nord has no effect on the direction of Storebrand ASA i.e., Storebrand ASA and Sparebank go up and down completely randomly.
Pair Corralation between Storebrand ASA and Sparebank
Assuming the 90 days trading horizon Storebrand ASA is expected to under-perform the Sparebank. In addition to that, Storebrand ASA is 1.85 times more volatile than Sparebank 1 Nord Norge. It trades about -0.06 of its total potential returns per unit of risk. Sparebank 1 Nord Norge is currently generating about 0.01 per unit of volatility. If you would invest 11,782 in Sparebank 1 Nord Norge on August 24, 2024 and sell it today you would earn a total of 6.00 from holding Sparebank 1 Nord Norge or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Storebrand ASA vs. Sparebank 1 Nord Norge
Performance |
| Timeline |
| Storebrand ASA |
| Sparebank 1 Nord |
Storebrand ASA and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Storebrand ASA and Sparebank
The main advantage of trading using opposite Storebrand ASA and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Storebrand ASA position performs unexpectedly, 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 Sparebank will offset losses from the drop in Sparebank's long position.| Storebrand ASA vs. DnB ASA | Storebrand ASA vs. Gjensidige Forsikring ASA | Storebrand ASA vs. Orkla ASA | Storebrand ASA vs. Telenor ASA |
| Sparebank vs. Sparebank 1 SMN | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. SpareBank 1 stlandet |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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