Correlation Between Danske Bank and Bank Hapoalim
Can any of the company-specific risk be diversified away by investing in both Danske Bank and Bank Hapoalim 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 Bank Hapoalim 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 Bank Hapoalim ADR, you can compare the effects of market volatilities on Danske Bank and Bank Hapoalim 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 Bank Hapoalim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and Bank Hapoalim.
Diversification Opportunities for Danske Bank and Bank Hapoalim
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Danske and Bank is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Bank Hapoalim ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Hapoalim ADR 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 Bank Hapoalim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Hapoalim ADR has no effect on the direction of Danske Bank i.e., Danske Bank and Bank Hapoalim go up and down completely randomly.
Pair Corralation between Danske Bank and Bank Hapoalim
Assuming the 90 days horizon Danske Bank AS is expected to generate 0.88 times more return on investment than Bank Hapoalim. However, Danske Bank AS is 1.14 times less risky than Bank Hapoalim. It trades about 0.26 of its potential returns per unit of risk. Bank Hapoalim ADR is currently generating about 0.14 per unit of risk. If you would invest 1,526 in Danske Bank AS on November 28, 2024 and sell it today you would earn a total of 173.00 from holding Danske Bank AS or generate 11.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Bank AS vs. Bank Hapoalim ADR
Performance |
| Timeline |
| Danske Bank AS |
| Bank Hapoalim ADR |
Danske Bank and Bank Hapoalim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and Bank Hapoalim
The main advantage of trading using opposite Danske Bank and Bank Hapoalim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, Bank Hapoalim 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 Bank Hapoalim will offset losses from the drop in Bank Hapoalim's long position.| Danske Bank vs. Israel Discount Bank | Danske Bank vs. Baraboo Bancorporation | Danske Bank vs. Schweizerische Nationalbank | Danske Bank vs. Jyske Bank AS |
| Bank Hapoalim vs. Israel Discount Bank | Bank Hapoalim vs. Baraboo Bancorporation | Bank Hapoalim vs. Schweizerische Nationalbank | Bank Hapoalim vs. Danske 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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