Correlation Between DBS Group and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both DBS Group and Nordea 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 DBS Group and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBS Group Holdings and Nordea Bank Abp, you can compare the effects of market volatilities on DBS Group and Nordea 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 DBS Group with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBS Group and Nordea Bank.
Diversification Opportunities for DBS Group and Nordea Bank
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DBS and Nordea is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings and Nordea Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Bank Abp and DBS Group 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 DBS Group Holdings are associated (or correlated) with Nordea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Bank Abp has no effect on the direction of DBS Group i.e., DBS Group and Nordea Bank go up and down completely randomly.
Pair Corralation between DBS Group and Nordea Bank
Assuming the 90 days horizon DBS Group Holdings is expected to generate 3.22 times more return on investment than Nordea Bank. However, DBS Group is 3.22 times more volatile than Nordea Bank Abp. It trades about 0.13 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about -0.22 per unit of risk. If you would invest 2,804 in DBS Group Holdings on August 30, 2024 and sell it today you would earn a total of 282.00 from holding DBS Group Holdings or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DBS Group Holdings vs. Nordea Bank Abp
Performance |
| Timeline |
| DBS Group Holdings |
| Nordea Bank Abp |
DBS Group and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBS Group and Nordea Bank
The main advantage of trading using opposite DBS Group and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group position performs unexpectedly, Nordea 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 Nordea Bank will offset losses from the drop in Nordea Bank's long position.| DBS Group vs. United Overseas Bank | DBS Group vs. KBC Groep NV | DBS Group vs. Overseas Chinese Banking | DBS Group vs. DBS Group Holdings |
| Nordea Bank vs. United Overseas Bank | Nordea Bank vs. KBC Groep NV | Nordea Bank vs. Bank Mandiri Persero | Nordea Bank vs. Overseas Chinese Banking |
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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