Correlation Between Sparebanken Vest and Instabank ASA
Can any of the company-specific risk be diversified away by investing in both Sparebanken Vest and Instabank 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 Sparebanken Vest and Instabank ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Vest and Instabank ASA, you can compare the effects of market volatilities on Sparebanken Vest and Instabank 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 Sparebanken Vest with a short position of Instabank ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Vest and Instabank ASA.
Diversification Opportunities for Sparebanken Vest and Instabank ASA
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sparebanken and Instabank is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Vest and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank ASA 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 Instabank ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instabank ASA has no effect on the direction of Sparebanken Vest i.e., Sparebanken Vest and Instabank ASA go up and down completely randomly.
Pair Corralation between Sparebanken Vest and Instabank ASA
Assuming the 90 days trading horizon Sparebanken Vest is expected to generate 0.62 times more return on investment than Instabank ASA. However, Sparebanken Vest is 1.62 times less risky than Instabank ASA. It trades about 0.09 of its potential returns per unit of risk. Instabank ASA is currently generating about 0.04 per unit of risk. If you would invest 8,586 in Sparebanken Vest on December 1, 2024 and sell it today you would earn a total of 5,638 from holding Sparebanken Vest or generate 65.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Sparebanken Vest vs. Instabank ASA
Performance |
| Timeline |
| Sparebanken Vest |
| Instabank ASA |
Sparebanken Vest and Instabank ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Vest and Instabank ASA
The main advantage of trading using opposite Sparebanken Vest and Instabank ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Vest position performs unexpectedly, Instabank 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 Instabank ASA will offset losses from the drop in Instabank ASA'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 |
| Instabank ASA vs. Grieg Seafood ASA | Instabank ASA vs. SD Standard Drilling | Instabank ASA vs. Dolphin Drilling AS | Instabank ASA vs. Sogn Sparebank |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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