Correlation Between Nordea Bank and DBS Group
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and DBS Group 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 Nordea Bank and DBS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordea Bank Abp and DBS Group Holdings, you can compare the effects of market volatilities on Nordea Bank and DBS Group 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 Nordea Bank with a short position of DBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and DBS Group.
Diversification Opportunities for Nordea Bank and DBS Group
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordea and DBS is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and DBS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBS Group Holdings and Nordea 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 Nordea Bank Abp are associated (or correlated) with DBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBS Group Holdings has no effect on the direction of Nordea Bank i.e., Nordea Bank and DBS Group go up and down completely randomly.
Pair Corralation between Nordea Bank and DBS Group
Assuming the 90 days horizon Nordea Bank is expected to generate 2.41 times less return on investment than DBS Group. In addition to that, Nordea Bank is 1.33 times more volatile than DBS Group Holdings. It trades about 0.03 of its total potential returns per unit of risk. DBS Group Holdings is currently generating about 0.08 per unit of volatility. If you would invest 8,086 in DBS Group Holdings on August 26, 2024 and sell it today you would earn a total of 4,411 from holding DBS Group Holdings or generate 54.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. DBS Group Holdings
Performance |
| Timeline |
| Nordea Bank Abp |
| DBS Group Holdings |
Nordea Bank and DBS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and DBS Group
The main advantage of trading using opposite Nordea Bank and DBS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, DBS Group 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 DBS Group will offset losses from the drop in DBS Group's long position.| Nordea Bank vs. United Overseas Bank | Nordea Bank vs. KBC Groep NV | Nordea Bank vs. Bank Mandiri Persero | Nordea Bank vs. Overseas Chinese Banking |
| DBS Group vs. KBC Groep NV | DBS Group vs. United Overseas Bank | DBS Group vs. Embassy Bancorp | DBS Group vs. Overseas Chinese Banking |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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