Correlation Between Dantax and Bavarian Nordic
Can any of the company-specific risk be diversified away by investing in both Dantax and Bavarian Nordic 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 Dantax and Bavarian Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dantax and Bavarian Nordic, you can compare the effects of market volatilities on Dantax and Bavarian Nordic 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 Dantax with a short position of Bavarian Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dantax and Bavarian Nordic.
Diversification Opportunities for Dantax and Bavarian Nordic
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dantax and Bavarian is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dantax and Bavarian Nordic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bavarian Nordic and Dantax 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 Dantax are associated (or correlated) with Bavarian Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bavarian Nordic has no effect on the direction of Dantax i.e., Dantax and Bavarian Nordic go up and down completely randomly.
Pair Corralation between Dantax and Bavarian Nordic
Assuming the 90 days trading horizon Dantax is expected to generate 1.14 times more return on investment than Bavarian Nordic. However, Dantax is 1.14 times more volatile than Bavarian Nordic. It trades about 0.32 of its potential returns per unit of risk. Bavarian Nordic is currently generating about 0.04 per unit of risk. If you would invest 42,400 in Dantax on October 26, 2024 and sell it today you would earn a total of 6,200 from holding Dantax or generate 14.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dantax vs. Bavarian Nordic
Performance |
| Timeline |
| Dantax |
| Bavarian Nordic |
Dantax and Bavarian Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dantax and Bavarian Nordic
The main advantage of trading using opposite Dantax and Bavarian Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dantax position performs unexpectedly, Bavarian Nordic 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 Bavarian Nordic will offset losses from the drop in Bavarian Nordic's long position.| Dantax vs. Groenlandsbanken AS | Dantax vs. Investeringsselskabet Luxor AS | Dantax vs. RIAS AS | Dantax vs. Lollands Bank |
| Bavarian Nordic vs. Ambu AS | Bavarian Nordic vs. Danske Bank AS | Bavarian Nordic vs. Genmab AS | Bavarian Nordic vs. DSV Panalpina 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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