Correlation Between Danske Bank and Copenhagen Airports
Can any of the company-specific risk be diversified away by investing in both Danske Bank and Copenhagen Airports 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 Copenhagen Airports 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 Copenhagen Airports AS, you can compare the effects of market volatilities on Danske Bank and Copenhagen Airports 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 Copenhagen Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and Copenhagen Airports.
Diversification Opportunities for Danske Bank and Copenhagen Airports
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Danske and Copenhagen is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Copenhagen Airports AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copenhagen Airports 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 Copenhagen Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copenhagen Airports has no effect on the direction of Danske Bank i.e., Danske Bank and Copenhagen Airports go up and down completely randomly.
Pair Corralation between Danske Bank and Copenhagen Airports
Assuming the 90 days trading horizon Danske Bank is expected to generate 35.04 times less return on investment than Copenhagen Airports. But when comparing it to its historical volatility, Danske Bank AS is 14.2 times less risky than Copenhagen Airports. It trades about 0.08 of its potential returns per unit of risk. Copenhagen Airports AS is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 398,000 in Copenhagen Airports AS on September 18, 2024 and sell it today you would earn a total of 204,000 from holding Copenhagen Airports AS or generate 51.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Bank AS vs. Copenhagen Airports AS
Performance |
| Timeline |
| Danske Bank AS |
| Copenhagen Airports |
Danske Bank and Copenhagen Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and Copenhagen Airports
The main advantage of trading using opposite Danske Bank and Copenhagen Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, Copenhagen Airports 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 Copenhagen Airports will offset losses from the drop in Copenhagen Airports' long position.| Danske Bank vs. Bavarian Nordic | Danske Bank vs. DSV Panalpina AS | Danske Bank vs. Vestas Wind Systems | Danske Bank vs. Ambu AS |
| Copenhagen Airports vs. Genmab AS | Copenhagen Airports vs. Danske Bank AS | Copenhagen Airports vs. Ambu AS | Copenhagen Airports vs. Bavarian Nordic |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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