Correlation Between Itera ASA and Jaeren Sparebank

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

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

Diversification Opportunities for Itera ASA and Jaeren Sparebank

0.22

Correlation Coefficient

Itera ASA  Jaeren Sparebank

Modest diversification

The 3 months correlation between Itera and Jaeren is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Itera ASA and Jaeren Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaeren Sparebank and Itera ASA 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 Itera ASA are associated (or correlated) with Jaeren Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaeren Sparebank has no effect on the direction of Itera ASA i.e., Itera ASA and Jaeren Sparebank go up and down completely randomly.

Pair Corralation between Itera ASA and Jaeren Sparebank

Assuming the 90 days trading horizon Itera ASA is expected to generate 1.62 times less return on investment than Jaeren Sparebank. In addition to that, Itera ASA is 2.63 times more volatile than Jaeren Sparebank. It trades about 0.03 of its total potential returns per unit of risk. Jaeren Sparebank is currently generating about 0.14 per unit of volatility. If you would invest  32,800  in Jaeren Sparebank on December 30, 2024 and sell it today you would earn a total of  3,200  from holding Jaeren Sparebank or generate 9.76% return on investment over 90 days.

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

Itera ASA  vs.  Jaeren Sparebank

Itera ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Itera ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Itera ASA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Jaeren Sparebank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jaeren Sparebank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Jaeren Sparebank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Itera ASA and Jaeren Sparebank

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

The idea behind Itera ASA and Jaeren Sparebank 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.