Correlation Between DNB BANK and Transportadora
Can any of the company-specific risk be diversified away by investing in both DNB BANK and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on DNB BANK and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of DNB BANK and Transportadora.
Diversification Opportunities for DNB BANK and Transportadora
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DNB and Transportadora is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding DNB BANK ASA and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of DNB BANK i.e., DNB BANK and Transportadora go up and down completely randomly.
Pair Corralation between DNB BANK and Transportadora
Assuming the 90 days trading horizon DNB BANK ASA is expected to generate 9.89 times more return on investment than Transportadora. However, DNB BANK is 9.89 times more volatile than Transportadora de Gas. It trades about 0.04 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.08 per unit of risk. If you would invest 1,800 in DNB BANK ASA on September 5, 2024 and sell it today you would earn a total of 185.00 from holding DNB BANK ASA or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
DNB BANK ASA vs. Transportadora de Gas
Performance |
| Timeline |
| DNB BANK ASA |
| Transportadora de Gas |
DNB BANK and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DNB BANK and Transportadora
The main advantage of trading using opposite DNB BANK and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DNB BANK position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| DNB BANK vs. Transportadora de Gas | DNB BANK vs. SPORT LISBOA E | DNB BANK vs. URBAN OUTFITTERS | DNB BANK vs. Big 5 Sporting |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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