Correlation Between HP and Danske Bank
Can any of the company-specific risk be diversified away by investing in both HP and Danske 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 HP and Danske Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Danske Bank AS, you can compare the effects of market volatilities on HP and Danske 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 HP with a short position of Danske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Danske Bank.
Diversification Opportunities for HP and Danske Bank
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HP and Danske is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Danske Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Bank AS and HP 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 HP Inc are associated (or correlated) with Danske Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Bank AS has no effect on the direction of HP i.e., HP and Danske Bank go up and down completely randomly.
Pair Corralation between HP and Danske Bank
Considering the 90-day investment horizon HP is expected to generate 2.68 times less return on investment than Danske Bank. But when comparing it to its historical volatility, HP Inc is 1.01 times less risky than Danske Bank. It trades about 0.02 of its potential returns per unit of risk. Danske Bank AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,705 in Danske Bank AS on September 1, 2024 and sell it today you would earn a total of 261.00 from holding Danske Bank AS or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Danske Bank AS
Performance |
| Timeline |
| HP Inc |
| Danske Bank AS |
HP and Danske Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Danske Bank
The main advantage of trading using opposite HP and Danske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Danske 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 Danske Bank will offset losses from the drop in Danske Bank's long position.The idea behind HP Inc and Danske Bank AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Danske Bank vs. Piraeus Bank SA | Danske Bank vs. Turkiye Garanti Bankasi | Danske Bank vs. Delhi Bank Corp | Danske Bank vs. Uwharrie Capital Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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