Correlation Between WILH WILHEL and SPAREBANK

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

Diversification Opportunities for WILH WILHEL and SPAREBANK

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between WILH WILHEL and SPAREBANK is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding WILH WILHEL HLDG 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 WILH WILHEL 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 WILH WILHEL HLDG 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 WILH WILHEL i.e., WILH WILHEL and SPAREBANK go up and down completely randomly.

Pair Corralation between WILH WILHEL and SPAREBANK

Assuming the 90 days trading horizon WILH WILHEL HLDG is expected to generate 1.75 times more return on investment than SPAREBANK. However, WILH WILHEL is 1.75 times more volatile than SPAREBANK 1 SMN. It trades about -0.12 of its potential returns per unit of risk. SPAREBANK 1 SMN is currently generating about -0.3 per unit of risk. If you would invest  20,400  in WILH WILHEL HLDG on July 4, 2022 and sell it today you would lose (1,300)  from holding WILH WILHEL HLDG or give up 6.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

WILH WILHEL HLDG  vs.  SPAREBANK 1 SMN

 Performance (%) 
       Timeline  
WILH WILHEL HLDG 
WILH WILHEL Performance
0 of 100
Over the last 90 days WILH WILHEL HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in November 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

WILH WILHEL 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 current stock price chaos, may contribute to medium-term losses for the stakeholders.

SPAREBANK Price Channel

WILH WILHEL and SPAREBANK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WILH WILHEL and SPAREBANK

The main advantage of trading using opposite WILH WILHEL and SPAREBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILH WILHEL 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 WILH WILHEL HLDG 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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