Correlation Between Danske Bank and Skjern Bank
Can any of the company-specific risk be diversified away by investing in both Danske Bank and Skjern Bank 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 Skjern Bank 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 Skjern Bank AS, you can compare the effects of market volatilities on Danske Bank and Skjern Bank 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 Skjern Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and Skjern Bank.
Diversification Opportunities for Danske Bank and Skjern Bank
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Danske and Skjern is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Skjern Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skjern Bank 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 Skjern Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skjern Bank AS has no effect on the direction of Danske Bank i.e., Danske Bank and Skjern Bank go up and down completely randomly.
Pair Corralation between Danske Bank and Skjern Bank
Assuming the 90 days trading horizon Danske Bank is expected to generate 1.1 times less return on investment than Skjern Bank. But when comparing it to its historical volatility, Danske Bank AS is 1.47 times less risky than Skjern Bank. It trades about 0.06 of its potential returns per unit of risk. Skjern Bank AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 16,221 in Skjern Bank AS on November 5, 2024 and sell it today you would earn a total of 3,279 from holding Skjern Bank AS or generate 20.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Bank AS vs. Skjern Bank AS
Performance |
| Timeline |
| Danske Bank AS |
| Skjern Bank AS |
Danske Bank and Skjern Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and Skjern Bank
The main advantage of trading using opposite Danske Bank and Skjern Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, Skjern Bank 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 Skjern Bank will offset losses from the drop in Skjern Bank'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 |
| Skjern Bank vs. Nordea Bank Abp | Skjern Bank vs. North Media AS | Skjern Bank vs. Laan Spar Bank | Skjern Bank vs. Nordfyns Bank 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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