Correlation Between Groenlandsbanken and Djurslands Bank
Can any of the company-specific risk be diversified away by investing in both Groenlandsbanken and Djurslands 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 Groenlandsbanken and Djurslands Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groenlandsbanken AS and Djurslands Bank, you can compare the effects of market volatilities on Groenlandsbanken and Djurslands 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 Groenlandsbanken with a short position of Djurslands Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groenlandsbanken and Djurslands Bank.
Diversification Opportunities for Groenlandsbanken and Djurslands Bank
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Groenlandsbanken and Djurslands is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS and Djurslands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Djurslands Bank 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 Djurslands Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Djurslands Bank has no effect on the direction of Groenlandsbanken i.e., Groenlandsbanken and Djurslands Bank go up and down completely randomly.
Pair Corralation between Groenlandsbanken and Djurslands Bank
Assuming the 90 days trading horizon Groenlandsbanken is expected to generate 1.12 times less return on investment than Djurslands Bank. But when comparing it to its historical volatility, Groenlandsbanken AS is 1.06 times less risky than Djurslands Bank. It trades about 0.2 of its potential returns per unit of risk. Djurslands Bank is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 51,500 in Djurslands Bank on October 26, 2024 and sell it today you would earn a total of 8,000 from holding Djurslands Bank or generate 15.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Groenlandsbanken AS vs. Djurslands Bank
Performance |
| Timeline |
| Groenlandsbanken |
| Djurslands Bank |
Groenlandsbanken and Djurslands Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groenlandsbanken and Djurslands Bank
The main advantage of trading using opposite Groenlandsbanken and Djurslands Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groenlandsbanken position performs unexpectedly, Djurslands 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 Djurslands Bank will offset losses from the drop in Djurslands Bank's long position.| Groenlandsbanken vs. Skjern Bank AS | Groenlandsbanken vs. Lollands Bank | Groenlandsbanken vs. Ringkjoebing Landbobank AS | Groenlandsbanken vs. Kreditbanken AS |
| Djurslands Bank vs. Skjern Bank AS | Djurslands Bank vs. Lollands Bank | Djurslands Bank vs. Kreditbanken AS | Djurslands Bank vs. Fynske 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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