Correlation Between FinecoBank SpA and Sparebank

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

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

Diversification Opportunities for FinecoBank SpA and Sparebank

0.54

Correlation Coefficient

FinecoBank SpA  Sparebank

Very weak diversification

The 3 months correlation between FinecoBank and Sparebank is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding FinecoBank SpA and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR 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 Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of FinecoBank SpA i.e., FinecoBank SpA and Sparebank go up and down completely randomly.

Pair Corralation between FinecoBank SpA and Sparebank

Assuming the 90 days trading horizon FinecoBank SpA is expected to generate 1.22 times more return on investment than Sparebank. However, FinecoBank SpA is 1.22 times more volatile than Sparebank 1 SR. It trades about 0.19 of its potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.11 per unit of risk. If you would invest  1,490  in FinecoBank SpA on October 11, 2024 and sell it today you would earn a total of  255.00  from holding FinecoBank SpA or generate 17.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

FinecoBank SpA  vs.  Sparebank 1 SR

FinecoBank SpA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FinecoBank SpA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FinecoBank SpA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sparebank 1 SR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebank 1 SR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Sparebank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FinecoBank SpA and Sparebank

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

The idea behind FinecoBank SpA and Sparebank 1 SR 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.