Correlation Between DNB BANK and Société Générale
Can any of the company-specific risk be diversified away by investing in both DNB BANK and Société Générale 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 DNB BANK and Société Générale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DNB BANK ASA and Socit Gnrale Socit, you can compare the effects of market volatilities on DNB BANK and Société Générale 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 DNB BANK with a short position of Société Générale. Check out your portfolio center. Please also check ongoing floating volatility patterns of DNB BANK and Société Générale.
Diversification Opportunities for DNB BANK and Société Générale
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DNB and Société is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding DNB BANK ASA and Socit Gnrale Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit Gnrale Socit and DNB BANK 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 DNB BANK ASA are associated (or correlated) with Société Générale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit Gnrale Socit has no effect on the direction of DNB BANK i.e., DNB BANK and Société Générale go up and down completely randomly.
Pair Corralation between DNB BANK and Société Générale
Assuming the 90 days trading horizon DNB BANK ASA is expected to generate 1.29 times more return on investment than Société Générale. However, DNB BANK is 1.29 times more volatile than Socit Gnrale Socit. It trades about 0.1 of its potential returns per unit of risk. Socit Gnrale Socit is currently generating about -0.12 per unit of risk. If you would invest 1,861 in DNB BANK ASA on September 1, 2024 and sell it today you would earn a total of 84.00 from holding DNB BANK ASA or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DNB BANK ASA vs. Socit Gnrale Socit
Performance |
| Timeline |
| DNB BANK ASA |
| Socit Gnrale Socit |
DNB BANK and Société Générale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DNB BANK and Société Générale
The main advantage of trading using opposite DNB BANK and Société Générale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DNB BANK position performs unexpectedly, Société Générale 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 Société Générale will offset losses from the drop in Société Générale's long position.| DNB BANK vs. Tyson Foods | DNB BANK vs. Digilife Technologies Limited | DNB BANK vs. ACCSYS TECHPLC EO | DNB BANK vs. FARO Technologies |
| Société Générale vs. Constellation Software | Société Générale vs. Nippon Steel | Société Générale vs. ALGOMA STEEL GROUP | Société Générale vs. FORMPIPE SOFTWARE AB |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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