Correlation Between SpareBank and Old Republic

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

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

Diversification Opportunities for SpareBank and Old Republic

0.0

Correlation Coefficient

SpareBank  Old Republic

Pay attention - limited upside

The 3 months correlation between SpareBank and Old is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SpareBank 1 SR Bank and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna and 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 SpareBank 1 SR Bank are associated (or correlated) with Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of SpareBank i.e., SpareBank and Old Republic go up and down completely randomly.

Pair Corralation between SpareBank and Old Republic

If you would invest  3,068  in Old Republic International on September 21, 2024 and sell it today you would earn a total of  501.00  from holding Old Republic International or generate 16.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SpareBank 1 SR Bank  vs.  Old Republic International

SpareBank 1 SR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SpareBank 1 SR Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, SpareBank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Old Republic Interna

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SpareBank and Old Republic

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

The idea behind SpareBank 1 SR Bank and Old Republic International 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.