Correlation Between Sparebanken Mre and Sparebank

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Can any of the company-specific risk be diversified away by investing in both Sparebanken Mre and 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 Sparebanken Mre and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Mre and Sparebank 1 SMN, you can compare the effects of market volatilities on Sparebanken Mre and 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 Sparebanken Mre with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Mre and Sparebank.

Diversification Opportunities for Sparebanken Mre and Sparebank

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Sparebanken and Sparebank is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Mre and Sparebank 1 SMN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SMN 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 Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SMN has no effect on the direction of Sparebanken Mre i.e., Sparebanken Mre and Sparebank go up and down completely randomly.

Pair Corralation between Sparebanken Mre and Sparebank

Assuming the 90 days trading horizon Sparebanken Mre is expected to generate 0.88 times more return on investment than Sparebank. However, Sparebanken Mre is 1.14 times less risky than Sparebank. It trades about 0.15 of its potential returns per unit of risk. Sparebank 1 SMN is currently generating about 0.06 per unit of risk. If you would invest  6,950  in Sparebanken Mre on September 10, 2022 and sell it today you would earn a total of  549.00  from holding Sparebanken Mre or generate 7.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sparebanken Mre  vs.  Sparebank 1 SMN

 Performance (%) 
       Timeline  
Sparebanken Mre 
Sparebanken Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Sparebanken Mre are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Sparebanken Mre is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

Sparebanken Price Channel

Sparebank 1 SMN 
Sparebank Performance
0 of 100
Over the last 90 days Sparebank 1 SMN has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Sparebank is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Sparebank Price Channel

Sparebanken Mre and Sparebank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sparebanken Mre and Sparebank

The main advantage of trading using opposite Sparebanken Mre and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Mre position performs unexpectedly, 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 Sparebank will offset losses from the drop in Sparebank's long position.
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The idea behind Sparebanken Mre and Sparebank 1 SMN 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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