Correlation Between Sparebanken Vest and Aasen Sparebank
Can any of the company-specific risk be diversified away by investing in both Sparebanken Vest and Aasen 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 Sparebanken Vest and Aasen Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Vest and Aasen Sparebank, you can compare the effects of market volatilities on Sparebanken Vest and Aasen 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 Sparebanken Vest with a short position of Aasen Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Vest and Aasen Sparebank.
Diversification Opportunities for Sparebanken Vest and Aasen Sparebank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sparebanken and Aasen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Vest and Aasen Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aasen Sparebank and Sparebanken Vest 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 Sparebanken Vest are associated (or correlated) with Aasen Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aasen Sparebank has no effect on the direction of Sparebanken Vest i.e., Sparebanken Vest and Aasen Sparebank go up and down completely randomly.
Pair Corralation between Sparebanken Vest and Aasen Sparebank
Assuming the 90 days trading horizon Sparebanken Vest is expected to under-perform the Aasen Sparebank. But the stock apears to be less risky and, when comparing its historical volatility, Sparebanken Vest is 1.02 times less risky than Aasen Sparebank. The stock trades about -0.06 of its potential returns per unit of risk. The Aasen Sparebank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 11,790 in Aasen Sparebank on September 2, 2024 and sell it today you would earn a total of 110.00 from holding Aasen Sparebank or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebanken Vest vs. Aasen Sparebank
Performance |
| Timeline |
| Sparebanken Vest |
| Aasen Sparebank |
Sparebanken Vest and Aasen Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Vest and Aasen Sparebank
The main advantage of trading using opposite Sparebanken Vest and Aasen Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Vest position performs unexpectedly, Aasen 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 Aasen Sparebank will offset losses from the drop in Aasen Sparebank's long position.| Sparebanken Vest vs. Sparebank 1 SMN | Sparebanken Vest vs. Sparebank 1 Nord Norge | Sparebanken Vest vs. Storebrand ASA | Sparebanken Vest vs. Pareto Bank ASA |
| Aasen Sparebank vs. Sparebank 1 SMN | Aasen Sparebank vs. Sparebank 1 Nord Norge | Aasen Sparebank vs. Sparebanken Vest | Aasen 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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