Correlation Between Lollands Bank and Hvidbjerg Bank
Can any of the company-specific risk be diversified away by investing in both Lollands Bank and Hvidbjerg 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 Lollands Bank and Hvidbjerg Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lollands Bank and Hvidbjerg Bank, you can compare the effects of market volatilities on Lollands Bank and Hvidbjerg 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 Lollands Bank with a short position of Hvidbjerg Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lollands Bank and Hvidbjerg Bank.
Diversification Opportunities for Lollands Bank and Hvidbjerg Bank
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lollands and Hvidbjerg is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lollands Bank and Hvidbjerg Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hvidbjerg Bank and Lollands Bank 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 Lollands Bank are associated (or correlated) with Hvidbjerg Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hvidbjerg Bank has no effect on the direction of Lollands Bank i.e., Lollands Bank and Hvidbjerg Bank go up and down completely randomly.
Pair Corralation between Lollands Bank and Hvidbjerg Bank
Assuming the 90 days trading horizon Lollands Bank is expected to generate 2.85 times less return on investment than Hvidbjerg Bank. In addition to that, Lollands Bank is 1.14 times more volatile than Hvidbjerg Bank. It trades about 0.01 of its total potential returns per unit of risk. Hvidbjerg Bank is currently generating about 0.04 per unit of volatility. If you would invest 10,500 in Hvidbjerg Bank on August 25, 2024 and sell it today you would earn a total of 1,300 from holding Hvidbjerg Bank or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lollands Bank vs. Hvidbjerg Bank
Performance |
| Timeline |
| Lollands Bank |
| Hvidbjerg Bank |
Lollands Bank and Hvidbjerg Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lollands Bank and Hvidbjerg Bank
The main advantage of trading using opposite Lollands Bank and Hvidbjerg Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lollands Bank position performs unexpectedly, Hvidbjerg 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 Hvidbjerg Bank will offset losses from the drop in Hvidbjerg Bank's long position.| Lollands Bank vs. Dataproces Group AS | Lollands Bank vs. cBrain AS | Lollands Bank vs. ALK Abell AS | Lollands Bank vs. ChemoMetec AS |
| Hvidbjerg Bank vs. Dataproces Group AS | Hvidbjerg Bank vs. cBrain AS | Hvidbjerg Bank vs. ALK Abell AS | Hvidbjerg Bank vs. ChemoMetec 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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