Correlation Between FinecoBank SpA and Sparebanken Vest

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

By analyzing existing cross correlation between FinecoBank SpA and Sparebanken Vest, you can compare the effects of market volatilities on FinecoBank SpA and Sparebanken Vest 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 FinecoBank SpA with a short position of Sparebanken Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinecoBank SpA and Sparebanken Vest.

Diversification Opportunities for FinecoBank SpA and Sparebanken Vest

0.44

Correlation Coefficient

FinecoBank SpA  Sparebanken Vest

Very weak diversification

The 3 months correlation between FinecoBank and Sparebanken is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding FinecoBank SpA and Sparebanken Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Vest and FinecoBank SpA 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 FinecoBank SpA are associated (or correlated) with Sparebanken Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Vest has no effect on the direction of FinecoBank SpA i.e., FinecoBank SpA and Sparebanken Vest go up and down completely randomly.

Pair Corralation between FinecoBank SpA and Sparebanken Vest

Assuming the 90 days trading horizon FinecoBank SpA is expected to generate 1.25 times more return on investment than Sparebanken Vest. However, FinecoBank SpA is 1.25 times more volatile than Sparebanken Vest. It trades about 0.12 of its potential returns per unit of risk. Sparebanken Vest is currently generating about 0.06 per unit of risk. If you would invest  1,680  in FinecoBank SpA on December 26, 2024 and sell it today you would earn a total of  206.00  from holding FinecoBank SpA or generate 12.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

FinecoBank SpA  vs.  Sparebanken Vest

FinecoBank SpA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FinecoBank SpA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, FinecoBank SpA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sparebanken Vest

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebanken Vest are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sparebanken Vest is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FinecoBank SpA and Sparebanken Vest

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

The idea behind FinecoBank SpA and Sparebanken Vest 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.