Correlation Between Lollands Bank and Vestjysk Bank
Can any of the company-specific risk be diversified away by investing in both Lollands Bank 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 Lollands Bank and Vestjysk 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 Vestjysk Bank AS, you can compare the effects of market volatilities on Lollands Bank 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 Lollands Bank with a short position of Vestjysk Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lollands Bank and Vestjysk Bank.
Diversification Opportunities for Lollands Bank and Vestjysk Bank
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lollands and Vestjysk is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lollands Bank 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 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 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 Lollands Bank i.e., Lollands Bank and Vestjysk Bank go up and down completely randomly.
Pair Corralation between Lollands Bank and Vestjysk Bank
Assuming the 90 days trading horizon Lollands Bank is expected to generate 4.91 times less return on investment than Vestjysk Bank. But when comparing it to its historical volatility, Lollands Bank is 1.18 times less risky than Vestjysk Bank. It trades about 0.06 of its potential returns per unit of risk. Vestjysk Bank AS is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 428.00 in Vestjysk Bank AS on October 26, 2024 and sell it today you would earn a total of 20.00 from holding Vestjysk Bank AS or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Lollands Bank vs. Vestjysk Bank AS
Performance |
| Timeline |
| Lollands Bank |
| Vestjysk Bank AS |
Lollands Bank and Vestjysk Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lollands Bank and Vestjysk Bank
The main advantage of trading using opposite Lollands Bank and Vestjysk Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lollands Bank 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.| Lollands Bank vs. Skjern Bank AS | Lollands Bank vs. Kreditbanken AS | Lollands Bank vs. Djurslands Bank | Lollands Bank vs. Groenlandsbanken 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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