Correlation Between Danske Bank and Traditions Bank
Can any of the company-specific risk be diversified away by investing in both Danske Bank and Traditions Bank 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 Traditions Bank 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 Traditions Bank, you can compare the effects of market volatilities on Danske Bank and Traditions Bank 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 Traditions Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and Traditions Bank.
Diversification Opportunities for Danske Bank and Traditions Bank
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Danske and Traditions is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Traditions Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traditions Bank 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 Traditions Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traditions Bank has no effect on the direction of Danske Bank i.e., Danske Bank and Traditions Bank go up and down completely randomly.
Pair Corralation between Danske Bank and Traditions Bank
Assuming the 90 days horizon Danske Bank AS is expected to under-perform the Traditions Bank. But the pink sheet apears to be less risky and, when comparing its historical volatility, Danske Bank AS is 2.27 times less risky than Traditions Bank. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Traditions Bank is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,943 in Traditions Bank on August 29, 2024 and sell it today you would earn a total of 556.00 from holding Traditions Bank or generate 18.89% 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. Traditions Bank
Performance |
| Timeline |
| Danske Bank AS |
| Traditions Bank |
Danske Bank and Traditions Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and Traditions Bank
The main advantage of trading using opposite Danske Bank and Traditions Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, Traditions Bank 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 Traditions Bank will offset losses from the drop in Traditions Bank's long position.| Danske Bank vs. Invesco High Income | Danske Bank vs. Blackrock Muniholdings Ny | Danske Bank vs. Nuveen California Select | Danske Bank vs. MFS Investment Grade |
| Traditions Bank vs. Israel Discount Bank | Traditions Bank vs. Baraboo Bancorporation | Traditions Bank vs. Danske Bank AS | Traditions 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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