Correlation Between Djurslands Bank and FLSmidth
Can any of the company-specific risk be diversified away by investing in both Djurslands Bank and FLSmidth 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 Djurslands Bank and FLSmidth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Djurslands Bank and FLSmidth Co, you can compare the effects of market volatilities on Djurslands Bank and FLSmidth 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 Djurslands Bank with a short position of FLSmidth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Djurslands Bank and FLSmidth.
Diversification Opportunities for Djurslands Bank and FLSmidth
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Djurslands and FLSmidth is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Djurslands Bank and FLSmidth Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLSmidth and Djurslands 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 Djurslands Bank are associated (or correlated) with FLSmidth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLSmidth has no effect on the direction of Djurslands Bank i.e., Djurslands Bank and FLSmidth go up and down completely randomly.
Pair Corralation between Djurslands Bank and FLSmidth
Assuming the 90 days trading horizon Djurslands Bank is expected to generate 86.18 times less return on investment than FLSmidth. But when comparing it to its historical volatility, Djurslands Bank is 1.15 times less risky than FLSmidth. It trades about 0.0 of its potential returns per unit of risk. FLSmidth Co is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 35,620 in FLSmidth Co on September 3, 2024 and sell it today you would earn a total of 2,900 from holding FLSmidth Co or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Djurslands Bank vs. FLSmidth Co
Performance |
| Timeline |
| Djurslands Bank |
| FLSmidth |
Djurslands Bank and FLSmidth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Djurslands Bank and FLSmidth
The main advantage of trading using opposite Djurslands Bank and FLSmidth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Djurslands Bank position performs unexpectedly, FLSmidth 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 FLSmidth will offset losses from the drop in FLSmidth's long position.| Djurslands Bank vs. FLSmidth Co | Djurslands Bank vs. Danske Bank AS | Djurslands Bank vs. ISS AS | Djurslands Bank 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |