Correlation Between Sparebanken Vest and Nidaros Sparebank
Can any of the company-specific risk be diversified away by investing in both Sparebanken Vest and Nidaros 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 Nidaros 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 Nidaros Sparebank, you can compare the effects of market volatilities on Sparebanken Vest and Nidaros 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 Nidaros Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Vest and Nidaros Sparebank.
Diversification Opportunities for Sparebanken Vest and Nidaros Sparebank
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sparebanken and Nidaros is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Vest and Nidaros Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidaros 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 Nidaros Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidaros Sparebank has no effect on the direction of Sparebanken Vest i.e., Sparebanken Vest and Nidaros Sparebank go up and down completely randomly.
Pair Corralation between Sparebanken Vest and Nidaros Sparebank
Assuming the 90 days trading horizon Sparebanken Vest is expected to generate 7.44 times less return on investment than Nidaros Sparebank. But when comparing it to its historical volatility, Sparebanken Vest is 1.21 times less risky than Nidaros Sparebank. It trades about 0.0 of its potential returns per unit of risk. Nidaros Sparebank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,851 in Nidaros Sparebank on September 2, 2024 and sell it today you would earn a total of 149.00 from holding Nidaros Sparebank or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebanken Vest vs. Nidaros Sparebank
Performance |
| Timeline |
| Sparebanken Vest |
| Nidaros Sparebank |
Sparebanken Vest and Nidaros Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Vest and Nidaros Sparebank
The main advantage of trading using opposite Sparebanken Vest and Nidaros Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Vest position performs unexpectedly, Nidaros 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 Nidaros Sparebank will offset losses from the drop in Nidaros 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 |
| Nidaros Sparebank vs. Sparebank 1 SMN | Nidaros Sparebank vs. Sparebank 1 Nord Norge | Nidaros Sparebank vs. Sparebanken Vest | Nidaros 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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