Correlation Between Helgeland Sparebank and Totens Sparebank

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

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

Diversification Opportunities for Helgeland Sparebank and Totens Sparebank

0.53

Correlation Coefficient

Helgeland Sparebank  Totens Sparebank

Very weak diversification

The 3 months correlation between Helgeland and Totens is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Helgeland Sparebank and Totens Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Totens Sparebank and Helgeland 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 Helgeland Sparebank are associated (or correlated) with Totens Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Totens Sparebank has no effect on the direction of Helgeland Sparebank i.e., Helgeland Sparebank and Totens Sparebank go up and down completely randomly.

Pair Corralation between Helgeland Sparebank and Totens Sparebank

Assuming the 90 days trading horizon Helgeland Sparebank is expected to generate 1.7 times less return on investment than Totens Sparebank. In addition to that, Helgeland Sparebank is 1.15 times more volatile than Totens Sparebank. It trades about 0.08 of its total potential returns per unit of risk. Totens Sparebank is currently generating about 0.15 per unit of volatility. If you would invest  26,650  in Totens Sparebank on September 2, 2024 and sell it today you would earn a total of  2,350  from holding Totens Sparebank or generate 8.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.21%
Values	Daily Returns

Helgeland Sparebank  vs.  Totens Sparebank

Helgeland Sparebank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Helgeland Sparebank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Helgeland Sparebank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Totens Sparebank

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Totens Sparebank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite conflicting essential indicators, Totens Sparebank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Helgeland Sparebank and Totens Sparebank

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

The idea behind Helgeland Sparebank and Totens 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.