Correlation Between Integrated Wind and Sparebank

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

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

Diversification Opportunities for Integrated Wind and Sparebank

-0.73

Correlation Coefficient

Integrated Wind  Sparebank

Pay attention - limited upside

The 3 months correlation between Integrated and Sparebank is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Wind Solutions and Sparebank 1 Ringerike in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 Ringerike and Integrated Wind 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 Integrated Wind Solutions 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 Ringerike has no effect on the direction of Integrated Wind i.e., Integrated Wind and Sparebank go up and down completely randomly.

Pair Corralation between Integrated Wind and Sparebank

Assuming the 90 days trading horizon Integrated Wind Solutions is expected to under-perform the Sparebank. In addition to that, Integrated Wind is 2.21 times more volatile than Sparebank 1 Ringerike. It trades about -0.07 of its total potential returns per unit of risk. Sparebank 1 Ringerike is currently generating about 0.32 per unit of volatility. If you would invest  30,522  in Sparebank 1 Ringerike on December 30, 2024 and sell it today you would earn a total of  7,443  from holding Sparebank 1 Ringerike or generate 24.39% return on investment over 90 days.

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

Integrated Wind Solutions  vs.  Sparebank 1 Ringerike

Integrated Wind Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integrated Wind Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Sparebank 1 Ringerike

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebank 1 Ringerike are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integrated Wind and Sparebank

The main advantage of trading using opposite Integrated Wind and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Wind 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 Integrated Wind Solutions and Sparebank 1 Ringerike 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.