Correlation Between Danske Bank and Absa Group
Can any of the company-specific risk be diversified away by investing in both Danske Bank and Absa Group 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 Bank and Absa Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danske Bank AS and Absa Group Limited, you can compare the effects of market volatilities on Danske Bank and Absa Group 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 Bank with a short position of Absa Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and Absa Group.
Diversification Opportunities for Danske Bank and Absa Group
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Danske and Absa is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Absa Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Group Limited and Danske 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 Danske Bank AS are associated (or correlated) with Absa Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Group Limited has no effect on the direction of Danske Bank i.e., Danske Bank and Absa Group go up and down completely randomly.
Pair Corralation between Danske Bank and Absa Group
If you would invest 811.00 in Absa Group Limited on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Absa Group Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Bank AS vs. Absa Group Limited
Performance |
| Timeline |
| Danske Bank AS |
| Absa Group Limited |
Danske Bank and Absa Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and Absa Group
The main advantage of trading using opposite Danske Bank and Absa Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, Absa Group 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 Absa Group will offset losses from the drop in Absa Group's long position.| Danske Bank vs. Invesco High Income | Danske Bank vs. Blackrock Muniholdings Ny | Danske Bank vs. MFS Investment Grade | Danske Bank vs. Federated Premier Municipal |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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