Correlation Between Romerike Sparebank and Sparebank
Can any of the company-specific risk be diversified away by investing in both Romerike Sparebank 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 Romerike Sparebank and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Romerike Sparebank and Sparebank 1 SMN, you can compare the effects of market volatilities on Romerike Sparebank 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 Romerike Sparebank with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Romerike Sparebank and Sparebank.
Diversification Opportunities for Romerike Sparebank and Sparebank
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Romerike and Sparebank is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Romerike Sparebank 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 Romerike 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 Romerike Sparebank 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 Romerike Sparebank i.e., Romerike Sparebank and Sparebank go up and down completely randomly.
Pair Corralation between Romerike Sparebank and Sparebank
Assuming the 90 days trading horizon Romerike Sparebank is expected to generate 1.1 times more return on investment than Sparebank. However, Romerike Sparebank is 1.1 times more volatile than Sparebank 1 SMN. It trades about 0.08 of its potential returns per unit of risk. Sparebank 1 SMN is currently generating about 0.05 per unit of risk. If you would invest 13,900 in Romerike Sparebank on March 28, 2025 and sell it today you would earn a total of 800.00 from holding Romerike Sparebank or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Romerike Sparebank vs. Sparebank 1 SMN
Performance |
| Timeline |
| Romerike Sparebank |
| Sparebank 1 SMN |
Romerike Sparebank and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Romerike Sparebank and Sparebank
The main advantage of trading using opposite Romerike Sparebank and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Romerike Sparebank 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.| Romerike Sparebank vs. Skue Sparebank | Romerike Sparebank vs. Tysnes Sparebank | Romerike Sparebank vs. Bien Sparebank ASA | Romerike Sparebank vs. Polaris Media |
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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 the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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