Correlation Between Danske Bank and GN Store
Can any of the company-specific risk be diversified away by investing in both Danske Bank and GN Store 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 GN Store 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 GN Store Nord, you can compare the effects of market volatilities on Danske Bank and GN Store 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 GN Store. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and GN Store.
Diversification Opportunities for Danske Bank and GN Store
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Danske and GN Store is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and GN Store Nord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GN Store Nord 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 GN Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GN Store Nord has no effect on the direction of Danske Bank i.e., Danske Bank and GN Store go up and down completely randomly.
Pair Corralation between Danske Bank and GN Store
Assuming the 90 days trading horizon Danske Bank AS is expected to generate 0.58 times more return on investment than GN Store. However, Danske Bank AS is 1.74 times less risky than GN Store. It trades about 0.04 of its potential returns per unit of risk. GN Store Nord is currently generating about 0.02 per unit of risk. If you would invest 19,970 in Danske Bank AS on August 25, 2024 and sell it today you would earn a total of 220.00 from holding Danske Bank AS or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Bank AS vs. GN Store Nord
Performance |
| Timeline |
| Danske Bank AS |
| GN Store Nord |
Danske Bank and GN Store Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and GN Store
The main advantage of trading using opposite Danske Bank and GN Store positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, GN Store 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 GN Store will offset losses from the drop in GN Store's 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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