Correlation Between Plastic Omnium and DNB BANK
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and DNB 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 Plastic Omnium and DNB BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and DNB BANK ASA, you can compare the effects of market volatilities on Plastic Omnium and DNB 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 Plastic Omnium with a short position of DNB BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and DNB BANK.
Diversification Opportunities for Plastic Omnium and DNB BANK
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Plastic and DNB is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and DNB BANK ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNB BANK ASA and Plastic Omnium 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 Plastic Omnium are associated (or correlated) with DNB BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNB BANK ASA has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and DNB BANK go up and down completely randomly.
Pair Corralation between Plastic Omnium and DNB BANK
Assuming the 90 days trading horizon Plastic Omnium is expected to generate 4.0 times more return on investment than DNB BANK. However, Plastic Omnium is 4.0 times more volatile than DNB BANK ASA. It trades about 0.23 of its potential returns per unit of risk. DNB BANK ASA is currently generating about 0.48 per unit of risk. If you would invest 965.00 in Plastic Omnium on October 22, 2024 and sell it today you would earn a total of 109.00 from holding Plastic Omnium or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. DNB BANK ASA
Performance |
| Timeline |
| Plastic Omnium |
| DNB BANK ASA |
Plastic Omnium and DNB BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and DNB BANK
The main advantage of trading using opposite Plastic Omnium and DNB BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, DNB 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 DNB BANK will offset losses from the drop in DNB BANK's long position.| Plastic Omnium vs. GRIFFIN MINING LTD | Plastic Omnium vs. Corsair Gaming | Plastic Omnium vs. Calibre Mining Corp | Plastic Omnium vs. DETALION GAMES SA |
| DNB BANK vs. DEVRY EDUCATION GRP | DNB BANK vs. FORMPIPE SOFTWARE AB | DNB BANK vs. CHINA EDUCATION GROUP | DNB BANK vs. Take Two Interactive Software |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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