Correlation Between Nidaros Sparebank and Deep Value

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

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

Diversification Opportunities for Nidaros Sparebank and Deep Value

-0.56

Correlation Coefficient

Nidaros Sparebank  Deep Value

Excellent diversification

The 3 months correlation between Nidaros and Deep is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nidaros Sparebank and Deep Value Driller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deep Value Driller and Nidaros Sparebank 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 Nidaros Sparebank are associated (or correlated) with Deep Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deep Value Driller has no effect on the direction of Nidaros Sparebank i.e., Nidaros Sparebank and Deep Value go up and down completely randomly.

Pair Corralation between Nidaros Sparebank and Deep Value

Assuming the 90 days trading horizon Nidaros Sparebank is expected to generate 0.24 times more return on investment than Deep Value. However, Nidaros Sparebank is 4.16 times less risky than Deep Value. It trades about 0.16 of its potential returns per unit of risk. Deep Value Driller is currently generating about 0.02 per unit of risk. If you would invest  10,102  in Nidaros Sparebank on December 21, 2024 and sell it today you would earn a total of  1,398  from holding Nidaros Sparebank or generate 13.84% return on investment over 90 days.

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

Nidaros Sparebank  vs.  Deep Value Driller

Nidaros Sparebank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nidaros Sparebank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Nidaros Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Deep Value Driller

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Deep Value Driller are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Deep Value may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nidaros Sparebank and Deep Value

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

The idea behind Nidaros Sparebank and Deep Value Driller 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.