Correlation Between SpareBank and Tysnes Sparebank

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

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

Diversification Opportunities for SpareBank and Tysnes Sparebank

0.18

Correlation Coefficient

SpareBank  Tysnes Sparebank

Average diversification

The 3 months correlation between SpareBank and Tysnes is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding SpareBank 1 stlandet and Tysnes Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tysnes Sparebank 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 stlandet are associated (or correlated) with Tysnes Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tysnes Sparebank has no effect on the direction of SpareBank i.e., SpareBank and Tysnes Sparebank go up and down completely randomly.

Pair Corralation between SpareBank and Tysnes Sparebank

Assuming the 90 days trading horizon SpareBank 1 stlandet is expected to generate 1.02 times more return on investment than Tysnes Sparebank. However, SpareBank is 1.02 times more volatile than Tysnes Sparebank. It trades about 0.06 of its potential returns per unit of risk. Tysnes Sparebank is currently generating about 0.06 per unit of risk. If you would invest  15,766  in SpareBank 1 stlandet on December 29, 2024 and sell it today you would earn a total of  684.00  from holding SpareBank 1 stlandet or generate 4.34% return on investment over 90 days.

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

SpareBank 1 stlandet  vs.  Tysnes Sparebank

SpareBank 1 stlandet

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SpareBank 1 stlandet are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, SpareBank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Tysnes Sparebank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tysnes Sparebank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Tysnes Sparebank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SpareBank and Tysnes Sparebank

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

The idea behind SpareBank 1 stlandet and Tysnes Sparebank 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.