Correlation Between Sunndal Sparebank and Nidaros Sparebank

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

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

Diversification Opportunities for Sunndal Sparebank and Nidaros Sparebank

0.16

Correlation Coefficient

Sunndal Sparebank  Nidaros Sparebank

Average diversification

The 3 months correlation between Sunndal and Nidaros is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sunndal Sparebank and Nidaros Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidaros Sparebank and Sunndal 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 Sunndal Sparebank are associated (or correlated) with Nidaros Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidaros Sparebank has no effect on the direction of Sunndal Sparebank i.e., Sunndal Sparebank and Nidaros Sparebank go up and down completely randomly.

Pair Corralation between Sunndal Sparebank and Nidaros Sparebank

Assuming the 90 days trading horizon Sunndal Sparebank is expected to generate 1.0 times more return on investment than Nidaros Sparebank. However, Sunndal Sparebank is 1.0 times more volatile than Nidaros Sparebank. It trades about 0.08 of its potential returns per unit of risk. Nidaros Sparebank is currently generating about 0.02 per unit of risk. If you would invest  11,190  in Sunndal Sparebank on September 18, 2024 and sell it today you would earn a total of  670.00  from holding Sunndal Sparebank or generate 5.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sunndal Sparebank  vs.  Nidaros Sparebank

Sunndal Sparebank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sunndal Sparebank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Sunndal Sparebank is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Nidaros Sparebank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nidaros Sparebank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Nidaros Sparebank is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sunndal Sparebank and Nidaros Sparebank

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

The idea behind Sunndal Sparebank and Nidaros 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.