Correlation Between National Atomic and Sparebank

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

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

Diversification Opportunities for National Atomic and Sparebank

-0.6

Correlation Coefficient

National Atomic  Sparebank

Excellent diversification

The 3 months correlation between National and Sparebank is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding National Atomic Co 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 National Atomic 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 National Atomic Co 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 National Atomic i.e., National Atomic and Sparebank go up and down completely randomly.

Pair Corralation between National Atomic and Sparebank

Assuming the 90 days trading horizon National Atomic Co is expected to under-perform the Sparebank. In addition to that, National Atomic is 2.07 times more volatile than Sparebank 1 SR. It trades about 0.0 of its total potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.44 per unit of volatility. If you would invest  14,340  in Sparebank 1 SR on October 23, 2024 and sell it today you would earn a total of  980.00  from holding Sparebank 1 SR or generate 6.83% return on investment over 90 days.

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

National Atomic Co  vs.  Sparebank 1 SR

National Atomic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Atomic Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, National Atomic is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sparebank 1 SR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebank 1 SR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sparebank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with National Atomic and Sparebank

The main advantage of trading using opposite National Atomic and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Atomic 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 National Atomic Co 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.