Correlation Between Danske Bank and Columbus
Can any of the company-specific risk be diversified away by investing in both Danske Bank and Columbus 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 Danske Bank and Columbus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danske Bank AS and Columbus AS, you can compare the effects of market volatilities on Danske Bank and Columbus 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 Danske Bank with a short position of Columbus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and Columbus.
Diversification Opportunities for Danske Bank and Columbus
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Danske and Columbus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Columbus AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus AS and Danske 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 Danske Bank AS are associated (or correlated) with Columbus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus AS has no effect on the direction of Danske Bank i.e., Danske Bank and Columbus go up and down completely randomly.
Pair Corralation between Danske Bank and Columbus
Assuming the 90 days trading horizon Danske Bank is expected to generate 1.45 times less return on investment than Columbus. But when comparing it to its historical volatility, Danske Bank AS is 1.72 times less risky than Columbus. It trades about 0.25 of its potential returns per unit of risk. Columbus AS is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,005 in Columbus AS on November 30, 2024 and sell it today you would earn a total of 270.00 from holding Columbus AS or generate 26.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Bank AS vs. Columbus AS
Performance |
| Timeline |
| Danske Bank AS |
| Columbus AS |
Danske Bank and Columbus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and Columbus
The main advantage of trading using opposite Danske Bank and Columbus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, Columbus 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 Columbus will offset losses from the drop in Columbus' long position.| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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