Correlation Between DnB ASA and Lea Bank
Can any of the company-specific risk be diversified away by investing in both DnB ASA and Lea 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 DnB ASA and Lea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DnB ASA and Lea Bank ASA, you can compare the effects of market volatilities on DnB ASA and Lea 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 DnB ASA with a short position of Lea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of DnB ASA and Lea Bank.
Diversification Opportunities for DnB ASA and Lea Bank
Poor diversification
The 3 months correlation between DnB and Lea is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding DnB ASA and Lea Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lea Bank ASA and DnB ASA 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 DnB ASA are associated (or correlated) with Lea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lea Bank ASA has no effect on the direction of DnB ASA i.e., DnB ASA and Lea Bank go up and down completely randomly.
Pair Corralation between DnB ASA and Lea Bank
Assuming the 90 days trading horizon DnB ASA is expected to generate 6.89 times less return on investment than Lea Bank. But when comparing it to its historical volatility, DnB ASA is 3.18 times less risky than Lea Bank. It trades about 0.09 of its potential returns per unit of risk. Lea Bank ASA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 875.00 in Lea Bank ASA on September 1, 2024 and sell it today you would earn a total of 95.00 from holding Lea Bank ASA or generate 10.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DnB ASA vs. Lea Bank ASA
Performance |
| Timeline |
| DnB ASA |
| Lea Bank ASA |
DnB ASA and Lea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DnB ASA and Lea Bank
The main advantage of trading using opposite DnB ASA and Lea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DnB ASA position performs unexpectedly, Lea 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 Lea Bank will offset losses from the drop in Lea Bank's long position.| DnB ASA vs. Telenor ASA | DnB ASA vs. Storebrand ASA | DnB ASA vs. Orkla ASA | DnB ASA vs. Gjensidige Forsikring ASA |
| Lea Bank vs. Grong Sparebank | Lea Bank vs. Austevoll Seafood ASA | Lea Bank vs. SD Standard Drilling | Lea Bank vs. NorAm Drilling 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
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |