Correlation Between Danske Bank and SP Group
Can any of the company-specific risk be diversified away by investing in both Danske Bank and SP Group 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 SP Group 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 SP Group AS, you can compare the effects of market volatilities on Danske Bank and SP Group 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 SP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and SP Group.
Diversification Opportunities for Danske Bank and SP Group
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Danske and SPG is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and SP Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Group 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 SP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Group AS has no effect on the direction of Danske Bank i.e., Danske Bank and SP Group go up and down completely randomly.
Pair Corralation between Danske Bank and SP Group
Assuming the 90 days trading horizon Danske Bank AS is expected to generate 0.58 times more return on investment than SP Group. However, Danske Bank AS is 1.72 times less risky than SP Group. It trades about 0.01 of its potential returns per unit of risk. SP Group AS is currently generating about -0.06 per unit of risk. If you would invest 20,220 in Danske Bank AS on September 1, 2024 and sell it today you would earn a total of 50.00 from holding Danske Bank AS or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Danske Bank AS vs. SP Group AS
Performance |
| Timeline |
| Danske Bank AS |
| SP Group AS |
Danske Bank and SP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and SP Group
The main advantage of trading using opposite Danske Bank and SP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, SP Group 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 SP Group will offset losses from the drop in SP Group'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 |
| SP Group vs. Schouw Co | SP Group vs. Per Aarsleff Holding | SP Group vs. HH International AS | SP Group vs. DFDS 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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