Correlation Between Danske Bank and KBC Groep
Can any of the company-specific risk be diversified away by investing in both Danske Bank and KBC Groep 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 KBC Groep 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 KBC Groep NV, you can compare the effects of market volatilities on Danske Bank and KBC Groep 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 KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and KBC Groep.
Diversification Opportunities for Danske Bank and KBC Groep
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Danske and KBC is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and KBC Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Groep NV 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 KBC Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Groep NV has no effect on the direction of Danske Bank i.e., Danske Bank and KBC Groep go up and down completely randomly.
Pair Corralation between Danske Bank and KBC Groep
Assuming the 90 days horizon Danske Bank AS is expected to generate 1.16 times more return on investment than KBC Groep. However, Danske Bank is 1.16 times more volatile than KBC Groep NV. It trades about -0.11 of its potential returns per unit of risk. KBC Groep NV is currently generating about -0.17 per unit of risk. If you would invest 1,502 in Danske Bank AS on August 30, 2024 and sell it today you would lose (106.00) from holding Danske Bank AS or give up 7.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Danske Bank AS vs. KBC Groep NV
Performance |
| Timeline |
| Danske Bank AS |
| KBC Groep NV |
Danske Bank and KBC Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and KBC Groep
The main advantage of trading using opposite Danske Bank and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, KBC Groep 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 KBC Groep will offset losses from the drop in KBC Groep'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 |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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