Correlation Between Sunndal Sparebank and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Sunndal Sparebank and BW Offshore 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 Sunndal Sparebank and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunndal Sparebank and BW Offshore, you can compare the effects of market volatilities on Sunndal Sparebank and BW Offshore 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 Sunndal Sparebank with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunndal Sparebank and BW Offshore.
Diversification Opportunities for Sunndal Sparebank and BW Offshore
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sunndal and BWO is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sunndal Sparebank and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Sunndal 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 Sunndal Sparebank are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Sunndal Sparebank i.e., Sunndal Sparebank and BW Offshore go up and down completely randomly.
Pair Corralation between Sunndal Sparebank and BW Offshore
Assuming the 90 days trading horizon Sunndal Sparebank is expected to generate 0.41 times more return on investment than BW Offshore. However, Sunndal Sparebank is 2.46 times less risky than BW Offshore. It trades about 0.07 of its potential returns per unit of risk. BW Offshore is currently generating about 0.01 per unit of risk. If you would invest 11,050 in Sunndal Sparebank on August 28, 2024 and sell it today you would earn a total of 530.00 from holding Sunndal Sparebank or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunndal Sparebank vs. BW Offshore
Performance |
| Timeline |
| Sunndal Sparebank |
| BW Offshore |
Sunndal Sparebank and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunndal Sparebank and BW Offshore
The main advantage of trading using opposite Sunndal Sparebank and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunndal Sparebank position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Sunndal Sparebank vs. DnB ASA | Sunndal Sparebank vs. Sparebank 1 SR | Sunndal Sparebank vs. Sparebank 1 SMN | Sunndal Sparebank vs. Sparebanken Mre |
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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