Correlation Between Totens Sparebank and Instabank ASA
Can any of the company-specific risk be diversified away by investing in both Totens Sparebank 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 Totens Sparebank and Instabank ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Totens Sparebank and Instabank ASA, you can compare the effects of market volatilities on Totens Sparebank 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 Totens Sparebank with a short position of Instabank ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Totens Sparebank and Instabank ASA.
Diversification Opportunities for Totens Sparebank and Instabank ASA
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Totens and Instabank is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Totens Sparebank and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank ASA and Totens 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 Totens Sparebank 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 Totens Sparebank i.e., Totens Sparebank and Instabank ASA go up and down completely randomly.
Pair Corralation between Totens Sparebank and Instabank ASA
Assuming the 90 days trading horizon Totens Sparebank is expected to generate 0.57 times more return on investment than Instabank ASA. However, Totens Sparebank is 1.75 times less risky than Instabank ASA. It trades about 0.5 of its potential returns per unit of risk. Instabank ASA is currently generating about -0.05 per unit of risk. If you would invest 28,100 in Totens Sparebank on August 29, 2024 and sell it today you would earn a total of 900.00 from holding Totens Sparebank or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.82% |
| Values | Daily Returns |
Totens Sparebank vs. Instabank ASA
Performance |
| Timeline |
| Totens Sparebank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Instabank ASA |
Totens Sparebank and Instabank ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Totens Sparebank and Instabank ASA
The main advantage of trading using opposite Totens Sparebank and Instabank ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Totens Sparebank 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.The idea behind Totens Sparebank and Instabank ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Instabank ASA vs. DnB ASA | Instabank ASA vs. Sparebank 1 SR | Instabank ASA vs. Sparebank 1 SMN | Instabank ASA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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