Correlation Between Danske Bank and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Danske Bank and Citizens Financial 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 Citizens Financial 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 Citizens Financial Corp, you can compare the effects of market volatilities on Danske Bank and Citizens Financial 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and Citizens Financial.
Diversification Opportunities for Danske Bank and Citizens Financial
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Danske and Citizens is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Citizens Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Corp 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Corp has no effect on the direction of Danske Bank i.e., Danske Bank and Citizens Financial go up and down completely randomly.
Pair Corralation between Danske Bank and Citizens Financial
Assuming the 90 days horizon Danske Bank AS is expected to under-perform the Citizens Financial. In addition to that, Danske Bank is 1.02 times more volatile than Citizens Financial Corp. It trades about -0.1 of its total potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.31 per unit of volatility. If you would invest 2,345 in Citizens Financial Corp on September 1, 2024 and sell it today you would earn a total of 255.00 from holding Citizens Financial Corp or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Danske Bank AS vs. Citizens Financial Corp
Performance |
| Timeline |
| Danske Bank AS |
| Citizens Financial Corp |
Danske Bank and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and Citizens Financial
The main advantage of trading using opposite Danske Bank and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial'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 |
| Citizens Financial vs. Century Next Financial | Citizens Financial vs. Triad Business Bank | Citizens Financial vs. First Ottawa Bancshares | Citizens Financial vs. First Community Financial |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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