Correlation Between Bavarian Nordic and Danske Bank
Can any of the company-specific risk be diversified away by investing in both Bavarian Nordic 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 Bavarian Nordic and Danske Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bavarian Nordic and Danske Bank AS, you can compare the effects of market volatilities on Bavarian Nordic 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 Bavarian Nordic with a short position of Danske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and Danske Bank.
Diversification Opportunities for Bavarian Nordic and Danske Bank
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bavarian and Danske is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic 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 Bavarian Nordic 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 Bavarian Nordic 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 Bavarian Nordic i.e., Bavarian Nordic and Danske Bank go up and down completely randomly.
Pair Corralation between Bavarian Nordic and Danske Bank
Assuming the 90 days trading horizon Bavarian Nordic is expected to generate 4.52 times less return on investment than Danske Bank. In addition to that, Bavarian Nordic is 2.14 times more volatile than Danske Bank AS. It trades about 0.01 of its total potential returns per unit of risk. Danske Bank AS is currently generating about 0.08 per unit of volatility. If you would invest 12,779 in Danske Bank AS on November 2, 2024 and sell it today you would earn a total of 8,941 from holding Danske Bank AS or generate 69.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bavarian Nordic vs. Danske Bank AS
Performance |
| Timeline |
| Bavarian Nordic |
| Danske Bank AS |
Bavarian Nordic and Danske Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bavarian Nordic and Danske Bank
The main advantage of trading using opposite Bavarian Nordic and Danske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bavarian Nordic 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.| Bavarian Nordic vs. Ambu AS | Bavarian Nordic vs. Danske Bank AS | Bavarian Nordic vs. Genmab AS | Bavarian Nordic vs. DSV Panalpina AS |
| Danske Bank vs. Bavarian Nordic | Danske Bank vs. DSV Panalpina AS | Danske Bank vs. Vestas Wind Systems | Danske Bank vs. Ambu AS |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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