Correlation Between Sparebank and Foresight Environmental

Can any of the company-specific risk be diversified away by investing in both Sparebank and Foresight Environmental 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 Sparebank and Foresight Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sparebank 1 SR and Foresight Environmental Infrastructure, you can compare the effects of market volatilities on Sparebank and Foresight Environmental 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 Sparebank with a short position of Foresight Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Foresight Environmental.

Diversification Opportunities for Sparebank and Foresight Environmental

0.15

Correlation Coefficient

Sparebank  Foresight Environmental

Average diversification

The 3 months correlation between Sparebank and Foresight is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and Foresight Environmental Infras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foresight Environmental and 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 Sparebank 1 SR are associated (or correlated) with Foresight Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foresight Environmental has no effect on the direction of Sparebank i.e., Sparebank and Foresight Environmental go up and down completely randomly.

Pair Corralation between Sparebank and Foresight Environmental

Assuming the 90 days trading horizon Sparebank 1 SR is expected to generate 0.62 times more return on investment than Foresight Environmental. However, Sparebank 1 SR is 1.61 times less risky than Foresight Environmental. It trades about 0.25 of its potential returns per unit of risk. Foresight Environmental Infrastructure is currently generating about 0.04 per unit of risk. If you would invest  14,500  in Sparebank 1 SR on December 25, 2024 and sell it today you would earn a total of  2,210  from holding Sparebank 1 SR or generate 15.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Sparebank 1 SR  vs.  Foresight Environmental Infras

Sparebank 1 SR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebank 1 SR are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sparebank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Foresight Environmental

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Foresight Environmental Infrastructure are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Foresight Environmental is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sparebank and Foresight Environmental

The main advantage of trading using opposite Sparebank and Foresight Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank position performs unexpectedly, Foresight Environmental 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 Foresight Environmental will offset losses from the drop in Foresight Environmental's long position.

The idea behind Sparebank 1 SR and Foresight Environmental Infrastructure 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.