Correlation Between Olav Thon and DnB ASA
Can any of the company-specific risk be diversified away by investing in both Olav Thon and DnB ASA 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 Olav Thon and DnB ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olav Thon Eien and DnB ASA, you can compare the effects of market volatilities on Olav Thon and DnB ASA 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 Olav Thon with a short position of DnB ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olav Thon and DnB ASA.
Diversification Opportunities for Olav Thon and DnB ASA
Excellent diversification
The 3 months correlation between Olav and DnB is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Olav Thon Eien and DnB ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DnB ASA and Olav Thon 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 Olav Thon Eien are associated (or correlated) with DnB ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DnB ASA has no effect on the direction of Olav Thon i.e., Olav Thon and DnB ASA go up and down completely randomly.
Pair Corralation between Olav Thon and DnB ASA
Assuming the 90 days trading horizon Olav Thon Eien is expected to generate 1.04 times more return on investment than DnB ASA. However, Olav Thon is 1.04 times more volatile than DnB ASA. It trades about 0.15 of its potential returns per unit of risk. DnB ASA is currently generating about -0.11 per unit of risk. If you would invest 21,900 in Olav Thon Eien on September 25, 2024 and sell it today you would earn a total of 600.00 from holding Olav Thon Eien or generate 2.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Olav Thon Eien vs. DnB ASA
Performance |
Timeline |
Olav Thon Eien |
DnB ASA |
Olav Thon and DnB ASA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Olav Thon and DnB ASA
The main advantage of trading using opposite Olav Thon and DnB ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olav Thon position performs unexpectedly, DnB ASA 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 DnB ASA will offset losses from the drop in DnB ASA's long position.Olav Thon vs. Gjensidige Forsikring ASA | Olav Thon vs. Storebrand ASA | Olav Thon vs. DnB ASA | Olav Thon vs. Veidekke ASA |
DnB ASA vs. Sparebank 1 Nord Norge | DnB ASA vs. Sparebanken Vest | DnB ASA vs. Storebrand ASA | DnB ASA vs. Gjensidige Forsikring ASA |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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