Correlation Between Nordfyns Bank and Fynske Bank
Can any of the company-specific risk be diversified away by investing in both Nordfyns Bank and Fynske 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 Nordfyns Bank and Fynske Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordfyns Bank AS and Fynske Bank AS, you can compare the effects of market volatilities on Nordfyns Bank and Fynske 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 Nordfyns Bank with a short position of Fynske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordfyns Bank and Fynske Bank.
Diversification Opportunities for Nordfyns Bank and Fynske Bank
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nordfyns and Fynske is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nordfyns Bank AS and Fynske Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fynske Bank AS and Nordfyns 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 Nordfyns Bank AS are associated (or correlated) with Fynske Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fynske Bank AS has no effect on the direction of Nordfyns Bank i.e., Nordfyns Bank and Fynske Bank go up and down completely randomly.
Pair Corralation between Nordfyns Bank and Fynske Bank
Assuming the 90 days trading horizon Nordfyns Bank AS is expected to under-perform the Fynske Bank. But the stock apears to be less risky and, when comparing its historical volatility, Nordfyns Bank AS is 2.0 times less risky than Fynske Bank. The stock trades about -0.41 of its potential returns per unit of risk. The Fynske Bank AS is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 14,400 in Fynske Bank AS on August 29, 2024 and sell it today you would lose (300.00) from holding Fynske Bank AS or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordfyns Bank AS vs. Fynske Bank AS
Performance |
| Timeline |
| Nordfyns Bank AS |
| Fynske Bank AS |
Nordfyns Bank and Fynske Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordfyns Bank and Fynske Bank
The main advantage of trading using opposite Nordfyns Bank and Fynske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordfyns Bank position performs unexpectedly, Fynske 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 Fynske Bank will offset losses from the drop in Fynske Bank's long position.| Nordfyns Bank vs. Sydbank AS | Nordfyns Bank vs. Jyske Bank AS | Nordfyns Bank vs. Alm Brand | Nordfyns Bank vs. Nordea Bank Abp |
| Fynske Bank vs. Sydbank AS | Fynske Bank vs. Jyske Bank AS | Fynske Bank vs. Alm Brand | Fynske Bank vs. Nordea Bank Abp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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