Correlation Between Danske Invest and Nordfyns Bank
Can any of the company-specific risk be diversified away by investing in both Danske Invest and Nordfyns 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 Invest and Nordfyns Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danske Invest Europa and Nordfyns Bank AS, you can compare the effects of market volatilities on Danske Invest and Nordfyns 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 Invest with a short position of Nordfyns Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Invest and Nordfyns Bank.
Diversification Opportunities for Danske Invest and Nordfyns Bank
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Danske and Nordfyns is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Danske Invest Europa and Nordfyns Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordfyns Bank AS and Danske Invest 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 Invest Europa are associated (or correlated) with Nordfyns Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordfyns Bank AS has no effect on the direction of Danske Invest i.e., Danske Invest and Nordfyns Bank go up and down completely randomly.
Pair Corralation between Danske Invest and Nordfyns Bank
Assuming the 90 days trading horizon Danske Invest is expected to generate 3.2 times less return on investment than Nordfyns Bank. But when comparing it to its historical volatility, Danske Invest Europa is 1.58 times less risky than Nordfyns Bank. It trades about 0.04 of its potential returns per unit of risk. Nordfyns Bank AS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 21,500 in Nordfyns Bank AS on September 12, 2024 and sell it today you would earn a total of 10,900 from holding Nordfyns Bank AS or generate 50.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Danske Invest Europa vs. Nordfyns Bank AS
Performance |
| Timeline |
| Danske Invest Europa |
| Nordfyns Bank AS |
Danske Invest and Nordfyns Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Invest and Nordfyns Bank
The main advantage of trading using opposite Danske Invest and Nordfyns Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Invest position performs unexpectedly, Nordfyns 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 Nordfyns Bank will offset losses from the drop in Nordfyns Bank's long position.| Danske Invest vs. Prime Office AS | Danske Invest vs. BankInvest Value Globale | Danske Invest vs. Carnegie Wealth Management | Danske Invest vs. Sydbank AS |
| Nordfyns Bank vs. Skjern Bank AS | Nordfyns Bank vs. Lollands Bank | Nordfyns Bank vs. Djurslands Bank | Nordfyns Bank vs. Moens Bank 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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