Correlation Between Sogn Sparebank and Sunndal Sparebank
Can any of the company-specific risk be diversified away by investing in both Sogn Sparebank and Sunndal 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 Sogn Sparebank and Sunndal Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sogn Sparebank and Sunndal Sparebank, you can compare the effects of market volatilities on Sogn Sparebank and Sunndal 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 Sogn Sparebank with a short position of Sunndal Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sogn Sparebank and Sunndal Sparebank.
Diversification Opportunities for Sogn Sparebank and Sunndal Sparebank
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sogn and Sunndal is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sogn Sparebank and Sunndal Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunndal Sparebank and Sogn 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 Sogn Sparebank are associated (or correlated) with Sunndal Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunndal Sparebank has no effect on the direction of Sogn Sparebank i.e., Sogn Sparebank and Sunndal Sparebank go up and down completely randomly.
Pair Corralation between Sogn Sparebank and Sunndal Sparebank
Assuming the 90 days trading horizon Sogn Sparebank is expected to generate 2.26 times more return on investment than Sunndal Sparebank. However, Sogn Sparebank is 2.26 times more volatile than Sunndal Sparebank. It trades about 0.12 of its potential returns per unit of risk. Sunndal Sparebank is currently generating about 0.07 per unit of risk. If you would invest 20,800 in Sogn Sparebank on September 6, 2024 and sell it today you would earn a total of 3,800 from holding Sogn Sparebank or generate 18.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sogn Sparebank vs. Sunndal Sparebank
Performance |
Timeline |
Sogn Sparebank |
Sunndal Sparebank |
Sogn Sparebank and Sunndal Sparebank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sogn Sparebank and Sunndal Sparebank
The main advantage of trading using opposite Sogn Sparebank and Sunndal Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sogn Sparebank position performs unexpectedly, Sunndal 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 Sunndal Sparebank will offset losses from the drop in Sunndal Sparebank's long position.Sogn Sparebank vs. Sparebanken Sor | Sogn Sparebank vs. SpareBank 1 stlandet | Sogn Sparebank vs. Holand og Setskog | Sogn Sparebank vs. Sparebank 1 Ringerike |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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