Correlation Between Orsted AS and Danske Bank
Can any of the company-specific risk be diversified away by investing in both Orsted AS and Danske 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 Orsted AS and Danske Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orsted AS and Danske Bank AS, you can compare the effects of market volatilities on Orsted AS and Danske 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 Orsted AS with a short position of Danske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted AS and Danske Bank.
Diversification Opportunities for Orsted AS and Danske Bank
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Orsted and Danske is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Danske Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Bank AS and Orsted AS 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 Orsted AS are associated (or correlated) with Danske Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Bank AS has no effect on the direction of Orsted AS i.e., Orsted AS and Danske Bank go up and down completely randomly.
Pair Corralation between Orsted AS and Danske Bank
Assuming the 90 days trading horizon Orsted AS is expected to under-perform the Danske Bank. In addition to that, Orsted AS is 2.3 times more volatile than Danske Bank AS. It trades about -0.02 of its total potential returns per unit of risk. Danske Bank AS is currently generating about 0.07 per unit of volatility. If you would invest 14,391 in Danske Bank AS on August 31, 2024 and sell it today you would earn a total of 5,879 from holding Danske Bank AS or generate 40.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orsted AS vs. Danske Bank AS
Performance |
| Timeline |
| Orsted AS |
| Danske Bank AS |
Orsted AS and Danske Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orsted AS and Danske Bank
The main advantage of trading using opposite Orsted AS and Danske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orsted AS position performs unexpectedly, Danske 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 Danske Bank will offset losses from the drop in Danske Bank's long position.| Orsted AS vs. Kreditbanken AS | Orsted AS vs. AP Mller | Orsted AS vs. AP Mller | Orsted AS vs. Brd Klee AS |
| Danske Bank vs. Sydbank AS | Danske Bank vs. Jyske Bank AS | Danske Bank vs. Alm Brand | Danske 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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