Correlation Between Danske Bank and First Community
Can any of the company-specific risk be diversified away by investing in both Danske Bank and First Community 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 First Community 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 First Community Financial, you can compare the effects of market volatilities on Danske Bank and First Community 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 First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and First Community.
Diversification Opportunities for Danske Bank and First Community
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Danske and First is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and First Community Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community Financial 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 First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community Financial has no effect on the direction of Danske Bank i.e., Danske Bank and First Community go up and down completely randomly.
Pair Corralation between Danske Bank and First Community
Assuming the 90 days horizon Danske Bank AS is expected to generate 1.0 times more return on investment than First Community. However, Danske Bank is 1.0 times more volatile than First Community Financial. It trades about 0.06 of its potential returns per unit of risk. First Community Financial is currently generating about -0.08 per unit of risk. If you would invest 1,043 in Danske Bank AS on September 2, 2024 and sell it today you would earn a total of 381.00 from holding Danske Bank AS or generate 36.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Bank AS vs. First Community Financial
Performance |
| Timeline |
| Danske Bank AS |
| First Community Financial |
Danske Bank and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and First Community
The main advantage of trading using opposite Danske Bank and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, First Community 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 First Community will offset losses from the drop in First Community'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 |
| First Community vs. CCSB Financial Corp | First Community vs. Bank of Utica | First Community vs. BEO Bancorp | First Community vs. First Community |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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