Correlation Between Danske Bank and Vestjysk Bank
Can any of the company-specific risk be diversified away by investing in both Danske Bank and Vestjysk 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 Vestjysk 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 Vestjysk Bank AS, you can compare the effects of market volatilities on Danske Bank and Vestjysk 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 Vestjysk Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and Vestjysk Bank.
Diversification Opportunities for Danske Bank and Vestjysk Bank
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Danske and Vestjysk is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Vestjysk Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestjysk 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 Vestjysk Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestjysk Bank AS has no effect on the direction of Danske Bank i.e., Danske Bank and Vestjysk Bank go up and down completely randomly.
Pair Corralation between Danske Bank and Vestjysk Bank
Assuming the 90 days trading horizon Danske Bank AS is expected to generate 1.99 times more return on investment than Vestjysk Bank. However, Danske Bank is 1.99 times more volatile than Vestjysk Bank AS. It trades about -0.11 of its potential returns per unit of risk. Vestjysk Bank AS is currently generating about -0.26 per unit of risk. If you would invest 20,790 in Danske Bank AS on September 4, 2024 and sell it today you would lose (570.00) from holding Danske Bank AS or give up 2.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Bank AS vs. Vestjysk Bank AS
Performance |
| Timeline |
| Danske Bank AS |
| Vestjysk Bank AS |
Danske Bank and Vestjysk Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and Vestjysk Bank
The main advantage of trading using opposite Danske Bank and Vestjysk Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, Vestjysk 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 Vestjysk Bank will offset losses from the drop in Vestjysk 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 |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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