Correlation Between Roebuck Food and Sparebank

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

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

Diversification Opportunities for Roebuck Food and Sparebank

0.73

Correlation Coefficient

Roebuck Food  Sparebank

Poor diversification

The 3 months correlation between Roebuck and Sparebank is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Roebuck Food Group and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR and Roebuck Food 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 Roebuck Food Group 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 SR has no effect on the direction of Roebuck Food i.e., Roebuck Food and Sparebank go up and down completely randomly.

Pair Corralation between Roebuck Food and Sparebank

Assuming the 90 days trading horizon Roebuck Food is expected to generate 1.04 times less return on investment than Sparebank. In addition to that, Roebuck Food is 1.25 times more volatile than Sparebank 1 SR. It trades about 0.06 of its total potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.08 per unit of volatility. If you would invest  11,859  in Sparebank 1 SR on September 13, 2024 and sell it today you would earn a total of  2,581  from holding Sparebank 1 SR or generate 21.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Roebuck Food Group  vs.  Sparebank 1 SR

Roebuck Food Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roebuck Food Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Roebuck Food is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sparebank 1 SR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebank 1 SR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sparebank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Roebuck Food and Sparebank

The main advantage of trading using opposite Roebuck Food and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roebuck Food 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.

The idea behind Roebuck Food Group and Sparebank 1 SR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.