Correlation Between Groenlandsbanken and BankInvest Optima
Can any of the company-specific risk be diversified away by investing in both Groenlandsbanken and BankInvest Optima 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 Groenlandsbanken and BankInvest Optima into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groenlandsbanken AS and BankInvest Optima 30, you can compare the effects of market volatilities on Groenlandsbanken and BankInvest Optima 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 Groenlandsbanken with a short position of BankInvest Optima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groenlandsbanken and BankInvest Optima.
Diversification Opportunities for Groenlandsbanken and BankInvest Optima
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Groenlandsbanken and BankInvest is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS and BankInvest Optima 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Optima and Groenlandsbanken 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 Groenlandsbanken AS are associated (or correlated) with BankInvest Optima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Optima has no effect on the direction of Groenlandsbanken i.e., Groenlandsbanken and BankInvest Optima go up and down completely randomly.
Pair Corralation between Groenlandsbanken and BankInvest Optima
Assuming the 90 days trading horizon Groenlandsbanken AS is expected to generate about the same return on investment as BankInvest Optima 30. However, Groenlandsbanken is 2.47 times more volatile than BankInvest Optima 30. It trades about 0.05 of its potential returns per unit of risk. BankInvest Optima 30 is currently producing about 0.12 per unit of risk. If you would invest 10,370 in BankInvest Optima 30 on September 4, 2024 and sell it today you would earn a total of 880.00 from holding BankInvest Optima 30 or generate 8.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Groenlandsbanken AS vs. BankInvest Optima 30
Performance |
| Timeline |
| Groenlandsbanken |
| BankInvest Optima |
Groenlandsbanken and BankInvest Optima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groenlandsbanken and BankInvest Optima
The main advantage of trading using opposite Groenlandsbanken and BankInvest Optima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groenlandsbanken position performs unexpectedly, BankInvest Optima 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 BankInvest Optima will offset losses from the drop in BankInvest Optima's long position.| Groenlandsbanken vs. Skjern Bank AS | Groenlandsbanken vs. Lollands Bank | Groenlandsbanken vs. Ringkjoebing Landbobank AS | Groenlandsbanken vs. Kreditbanken AS |
| BankInvest Optima vs. Novo Nordisk AS | BankInvest Optima vs. Nordea Bank Abp | BankInvest Optima vs. DSV Panalpina AS | BankInvest Optima vs. AP Mller |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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