Correlation Between Sunndal Sparebank and Romsdal Sparebank
Can any of the company-specific risk be diversified away by investing in both Sunndal Sparebank and Romsdal 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 Sunndal Sparebank and Romsdal Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunndal Sparebank and Romsdal Sparebank, you can compare the effects of market volatilities on Sunndal Sparebank and Romsdal 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 Sunndal Sparebank with a short position of Romsdal Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunndal Sparebank and Romsdal Sparebank.
Diversification Opportunities for Sunndal Sparebank and Romsdal Sparebank
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sunndal and Romsdal is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sunndal Sparebank and Romsdal Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romsdal Sparebank 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 Romsdal Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romsdal Sparebank has no effect on the direction of Sunndal Sparebank i.e., Sunndal Sparebank and Romsdal Sparebank go up and down completely randomly.
Pair Corralation between Sunndal Sparebank and Romsdal Sparebank
Assuming the 90 days trading horizon Sunndal Sparebank is expected to generate 1.12 times less return on investment than Romsdal Sparebank. But when comparing it to its historical volatility, Sunndal Sparebank is 1.16 times less risky than Romsdal Sparebank. It trades about 0.02 of its potential returns per unit of risk. Romsdal Sparebank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11,086 in Romsdal Sparebank on August 28, 2024 and sell it today you would earn a total of 1,310 from holding Romsdal Sparebank or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunndal Sparebank vs. Romsdal Sparebank
Performance |
| Timeline |
| Sunndal Sparebank |
| Romsdal Sparebank |
Sunndal Sparebank and Romsdal Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunndal Sparebank and Romsdal Sparebank
The main advantage of trading using opposite Sunndal Sparebank and Romsdal Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunndal Sparebank position performs unexpectedly, Romsdal 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 Romsdal Sparebank will offset losses from the drop in Romsdal Sparebank'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 |
| Romsdal Sparebank vs. Elkem ASA | Romsdal Sparebank vs. Integrated Wind Solutions | Romsdal Sparebank vs. Vow ASA | Romsdal Sparebank vs. North Energy 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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