Correlation Between Nordfyns Bank and Kreditbanken
Can any of the company-specific risk be diversified away by investing in both Nordfyns Bank and Kreditbanken 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 Kreditbanken 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 Kreditbanken AS, you can compare the effects of market volatilities on Nordfyns Bank and Kreditbanken 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 Kreditbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordfyns Bank and Kreditbanken.
Diversification Opportunities for Nordfyns Bank and Kreditbanken
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordfyns and Kreditbanken is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nordfyns Bank AS and Kreditbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kreditbanken 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 Kreditbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kreditbanken AS has no effect on the direction of Nordfyns Bank i.e., Nordfyns Bank and Kreditbanken go up and down completely randomly.
Pair Corralation between Nordfyns Bank and Kreditbanken
Assuming the 90 days trading horizon Nordfyns Bank AS is expected to under-perform the Kreditbanken. But the stock apears to be less risky and, when comparing its historical volatility, Nordfyns Bank AS is 1.8 times less risky than Kreditbanken. The stock trades about -0.5 of its potential returns per unit of risk. The Kreditbanken AS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 498,000 in Kreditbanken AS on September 1, 2024 and sell it today you would earn a total of 2,000 from holding Kreditbanken AS or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordfyns Bank AS vs. Kreditbanken AS
Performance |
| Timeline |
| Nordfyns Bank AS |
| Kreditbanken AS |
Nordfyns Bank and Kreditbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordfyns Bank and Kreditbanken
The main advantage of trading using opposite Nordfyns Bank and Kreditbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordfyns Bank position performs unexpectedly, Kreditbanken 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 Kreditbanken will offset losses from the drop in Kreditbanken's long position.| Nordfyns Bank vs. Skjern Bank AS | Nordfyns Bank vs. Lollands Bank | Nordfyns Bank vs. Djurslands Bank | Nordfyns Bank vs. Moens Bank AS |
| Kreditbanken vs. Lollands Bank | Kreditbanken vs. Groenlandsbanken AS | Kreditbanken vs. Skjern Bank AS | Kreditbanken vs. Djurslands Bank |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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