Correlation Between Nordfyns Bank and Vestjysk Bank
Can any of the company-specific risk be diversified away by investing in both Nordfyns 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 Nordfyns 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 Nordfyns Bank AS and Vestjysk Bank AS, you can compare the effects of market volatilities on Nordfyns 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 Nordfyns Bank with a short position of Vestjysk Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordfyns Bank and Vestjysk Bank.
Diversification Opportunities for Nordfyns Bank and Vestjysk Bank
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nordfyns and Vestjysk is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nordfyns Bank AS 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 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 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 Nordfyns Bank i.e., Nordfyns Bank and Vestjysk Bank go up and down completely randomly.
Pair Corralation between Nordfyns Bank and Vestjysk Bank
Assuming the 90 days trading horizon Nordfyns Bank is expected to generate 1.34 times less return on investment than Vestjysk Bank. In addition to that, Nordfyns Bank is 1.1 times more volatile than Vestjysk Bank AS. It trades about 0.18 of its total potential returns per unit of risk. Vestjysk Bank AS is currently generating about 0.26 per unit of volatility. If you would invest 407.00 in Vestjysk Bank AS on November 7, 2024 and sell it today you would earn a total of 42.00 from holding Vestjysk Bank AS or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordfyns Bank AS vs. Vestjysk Bank AS
Performance |
| Timeline |
| Nordfyns Bank AS |
| Vestjysk Bank AS |
Nordfyns Bank and Vestjysk Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordfyns Bank and Vestjysk Bank
The main advantage of trading using opposite Nordfyns Bank and Vestjysk Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordfyns 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.| Nordfyns Bank vs. Skjern Bank AS | Nordfyns Bank vs. Lollands Bank | Nordfyns Bank vs. Djurslands Bank | Nordfyns Bank vs. Moens Bank 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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