Correlation Between Sparebanken Mre and DnB ASA

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Can any of the company-specific risk be diversified away by investing in both Sparebanken Mre and DnB ASA 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 Sparebanken Mre and DnB ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Mre and DnB ASA, you can compare the effects of market volatilities on Sparebanken Mre and DnB ASA 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 Sparebanken Mre with a short position of DnB ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Mre and DnB ASA.

Diversification Opportunities for Sparebanken Mre and DnB ASA

SparebankenDnBDiversified AwaySparebankenDnBDiversified Away100%
0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Sparebanken and DnB is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Mre and DnB ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DnB ASA and Sparebanken Mre 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 Sparebanken Mre are associated (or correlated) with DnB ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DnB ASA has no effect on the direction of Sparebanken Mre i.e., Sparebanken Mre and DnB ASA go up and down completely randomly.

Pair Corralation between Sparebanken Mre and DnB ASA

Assuming the 90 days trading horizon Sparebanken Mre is expected to generate 1.15 times less return on investment than DnB ASA. In addition to that, Sparebanken Mre is 1.47 times more volatile than DnB ASA. It trades about 0.1 of its total potential returns per unit of risk. DnB ASA is currently generating about 0.16 per unit of volatility. If you would invest  23,050  in DnB ASA on November 22, 2024 and sell it today you would earn a total of  1,930  from holding DnB ASA or generate 8.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.33%
ValuesDaily Returns

Sparebanken Mre  vs.  DnB ASA

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0510
JavaScript chart by amCharts 3.21.15MORG DNB
       Timeline  
Sparebanken Mre 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sparebanken Mre are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Sparebanken Mre may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb889092949698100102
DnB ASA 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in DnB ASA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, DnB ASA may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb225230235240245250

Sparebanken Mre and DnB ASA Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.11-3.08-2.05-1.010.01.082.173.274.36 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15MORG DNB
       Returns  

Pair Trading with Sparebanken Mre and DnB ASA

The main advantage of trading using opposite Sparebanken Mre and DnB ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Mre position performs unexpectedly, DnB ASA 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 DnB ASA will offset losses from the drop in DnB ASA's long position.
The idea behind Sparebanken Mre and DnB ASA 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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