Correlation Between Groenlandsbanken and Vestjysk Bank
Can any of the company-specific risk be diversified away by investing in both Groenlandsbanken and Vestjysk 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 Vestjysk 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 Vestjysk Bank AS, you can compare the effects of market volatilities on Groenlandsbanken and Vestjysk 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 Vestjysk Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groenlandsbanken and Vestjysk Bank.
Diversification Opportunities for Groenlandsbanken and Vestjysk Bank
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Groenlandsbanken and Vestjysk is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS and Vestjysk Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestjysk Bank AS 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 Vestjysk Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestjysk Bank AS has no effect on the direction of Groenlandsbanken i.e., Groenlandsbanken and Vestjysk Bank go up and down completely randomly.
Pair Corralation between Groenlandsbanken and Vestjysk Bank
Assuming the 90 days trading horizon Groenlandsbanken AS is expected to generate 1.71 times more return on investment than Vestjysk Bank. However, Groenlandsbanken is 1.71 times more volatile than Vestjysk Bank AS. It trades about 0.35 of its potential returns per unit of risk. Vestjysk Bank AS is currently generating about 0.23 per unit of risk. If you would invest 70,500 in Groenlandsbanken AS on October 19, 2024 and sell it today you would earn a total of 7,500 from holding Groenlandsbanken AS or generate 10.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Groenlandsbanken AS vs. Vestjysk Bank AS
Performance |
| Timeline |
| Groenlandsbanken |
| Vestjysk Bank AS |
Groenlandsbanken and Vestjysk Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groenlandsbanken and Vestjysk Bank
The main advantage of trading using opposite Groenlandsbanken and Vestjysk Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groenlandsbanken position performs unexpectedly, Vestjysk 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 Vestjysk Bank will offset losses from the drop in Vestjysk Bank's long position.| Groenlandsbanken vs. Skjern Bank AS | Groenlandsbanken vs. Lollands Bank | Groenlandsbanken vs. Ringkjoebing Landbobank AS | Groenlandsbanken vs. Kreditbanken AS |
| Vestjysk Bank vs. Spar Nord Bank | Vestjysk Bank vs. Sydbank AS | Vestjysk Bank vs. Ringkjoebing Landbobank AS | Vestjysk Bank vs. Alm Brand |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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