Correlation Between Sparebanken Vest and Sunndal Sparebank
Can any of the company-specific risk be diversified away by investing in both Sparebanken Vest and Sunndal 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 Sunndal 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 Sunndal Sparebank, you can compare the effects of market volatilities on Sparebanken Vest and Sunndal 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 Sunndal Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Vest and Sunndal Sparebank.
Diversification Opportunities for Sparebanken Vest and Sunndal Sparebank
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sparebanken and Sunndal is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Vest and Sunndal Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunndal 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 Sunndal Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunndal Sparebank has no effect on the direction of Sparebanken Vest i.e., Sparebanken Vest and Sunndal Sparebank go up and down completely randomly.
Pair Corralation between Sparebanken Vest and Sunndal Sparebank
Assuming the 90 days trading horizon Sparebanken Vest is expected to generate 2.64 times less return on investment than Sunndal Sparebank. In addition to that, Sparebanken Vest is 1.4 times more volatile than Sunndal Sparebank. It trades about 0.02 of its total potential returns per unit of risk. Sunndal Sparebank is currently generating about 0.07 per unit of volatility. If you would invest 10,800 in Sunndal Sparebank on September 2, 2024 and sell it today you would earn a total of 810.00 from holding Sunndal Sparebank or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebanken Vest vs. Sunndal Sparebank
Performance |
| Timeline |
| Sparebanken Vest |
| Sunndal Sparebank |
Sparebanken Vest and Sunndal Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Vest and Sunndal Sparebank
The main advantage of trading using opposite Sparebanken Vest and Sunndal Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Vest position performs unexpectedly, Sunndal 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 Sunndal Sparebank will offset losses from the drop in Sunndal 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 |
| Sunndal Sparebank vs. Skue Sparebank | Sunndal Sparebank vs. Sparebanken Ost | Sunndal Sparebank vs. Dolphin Drilling AS | Sunndal Sparebank vs. NorAm Drilling AS |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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