Correlation Between Danske Bank and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Danske Bank and KeyCorp 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 KeyCorp 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 KeyCorp, you can compare the effects of market volatilities on Danske Bank and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and KeyCorp.
Diversification Opportunities for Danske Bank and KeyCorp
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Danske and KeyCorp is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Danske Bank i.e., Danske Bank and KeyCorp go up and down completely randomly.
Pair Corralation between Danske Bank and KeyCorp
Assuming the 90 days horizon Danske Bank is expected to generate 4.24 times less return on investment than KeyCorp. But when comparing it to its historical volatility, Danske Bank AS is 4.14 times less risky than KeyCorp. It trades about 0.19 of its potential returns per unit of risk. KeyCorp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,704 in KeyCorp on August 26, 2024 and sell it today you would earn a total of 256.00 from holding KeyCorp or generate 15.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Bank AS vs. KeyCorp
Performance |
| Timeline |
| Danske Bank AS |
| KeyCorp |
Danske Bank and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and KeyCorp
The main advantage of trading using opposite Danske Bank and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Danske Bank vs. National Bank of | Danske Bank vs. Piraeus Bank SA | Danske Bank vs. Lloyds Banking Group | Danske Bank vs. Zions Bancorporation |
| KeyCorp vs. Fifth Third Bancorp | KeyCorp vs. Zions Bancorporation | KeyCorp vs. Huntington Bancshares Incorporated | KeyCorp vs. PNC Financial Services |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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