Correlation Between BankInvest Value and Laan Spar

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

By analyzing existing cross correlation between BankInvest Value Globale and Laan Spar Bank, you can compare the effects of market volatilities on BankInvest Value and Laan Spar 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 BankInvest Value with a short position of Laan Spar. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInvest Value and Laan Spar.

Diversification Opportunities for BankInvest Value and Laan Spar

0.21

Correlation Coefficient

BankInvest Value  Laan Spar

Modest diversification

The 3 months correlation between BankInvest and Laan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Value Globale and Laan Spar Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laan Spar Bank and BankInvest Value 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 BankInvest Value Globale are associated (or correlated) with Laan Spar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laan Spar Bank has no effect on the direction of BankInvest Value i.e., BankInvest Value and Laan Spar go up and down completely randomly.

Pair Corralation between BankInvest Value and Laan Spar

Assuming the 90 days trading horizon BankInvest Value Globale is expected to generate 0.56 times more return on investment than Laan Spar. However, BankInvest Value Globale is 1.8 times less risky than Laan Spar. It trades about 0.18 of its potential returns per unit of risk. Laan Spar Bank is currently generating about 0.01 per unit of risk. If you would invest  10,010  in BankInvest Value Globale on September 1, 2024 and sell it today you would earn a total of  740.00  from holding BankInvest Value Globale or generate 7.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.54%
Values	Daily Returns

BankInvest Value Globale  vs.  Laan Spar Bank

BankInvest Value Globale

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Value Globale are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BankInvest Value may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Laan Spar Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laan Spar Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Laan Spar is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BankInvest Value and Laan Spar

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

The idea behind BankInvest Value Globale and Laan Spar Bank 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..