Correlation Between American Express and Danske Bank
Can any of the company-specific risk be diversified away by investing in both American Express and Danske Bank 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 American Express and Danske Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Danske Bank AS, you can compare the effects of market volatilities on American Express and Danske Bank 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 American Express with a short position of Danske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Danske Bank.
Diversification Opportunities for American Express and Danske Bank
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Danske is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Danske Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Bank AS and American Express 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 American Express are associated (or correlated) with Danske Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Bank AS has no effect on the direction of American Express i.e., American Express and Danske Bank go up and down completely randomly.
Pair Corralation between American Express and Danske Bank
Considering the 90-day investment horizon American Express is expected to generate 1.1 times more return on investment than Danske Bank. However, American Express is 1.1 times more volatile than Danske Bank AS. It trades about 0.25 of its potential returns per unit of risk. Danske Bank AS is currently generating about -0.06 per unit of risk. If you would invest 27,408 in American Express on August 31, 2024 and sell it today you would earn a total of 3,017 from holding American Express or generate 11.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Danske Bank AS
Performance |
| Timeline |
| American Express |
| Danske Bank AS |
American Express and Danske Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Danske Bank
The main advantage of trading using opposite American Express and Danske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Danske Bank 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 Danske Bank will offset losses from the drop in Danske Bank's long position.| American Express vs. Visa Class A | American Express vs. RLJ Lodging Trust | American Express vs. Aquagold International | American Express vs. Stepstone Group |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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