Correlation Between Société Générale and DNB BANK
Can any of the company-specific risk be diversified away by investing in both Société Générale and DNB 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 Société Générale and DNB BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Socit Gnrale Socit and DNB BANK ASA, you can compare the effects of market volatilities on Société Générale and DNB 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 Société Générale with a short position of DNB BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Société Générale and DNB BANK.
Diversification Opportunities for Société Générale and DNB BANK
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Société and DNB is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Socit Gnrale Socit and DNB BANK ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNB BANK ASA and Société Générale 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 Socit Gnrale Socit are associated (or correlated) with DNB BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNB BANK ASA has no effect on the direction of Société Générale i.e., Société Générale and DNB BANK go up and down completely randomly.
Pair Corralation between Société Générale and DNB BANK
Assuming the 90 days trading horizon Socit Gnrale Socit is expected to under-perform the DNB BANK. But the stock apears to be less risky and, when comparing its historical volatility, Socit Gnrale Socit is 1.29 times less risky than DNB BANK. The stock trades about -0.12 of its potential returns per unit of risk. The DNB BANK ASA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,861 in DNB BANK ASA on September 1, 2024 and sell it today you would earn a total of 84.00 from holding DNB BANK ASA or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Socit Gnrale Socit vs. DNB BANK ASA
Performance |
| Timeline |
| Socit Gnrale Socit |
| DNB BANK ASA |
Société Générale and DNB BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Société Générale and DNB BANK
The main advantage of trading using opposite Société Générale and DNB BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Société Générale position performs unexpectedly, DNB 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 DNB BANK will offset losses from the drop in DNB BANK's long position.| Société Générale vs. Constellation Software | Société Générale vs. Nippon Steel | Société Générale vs. ALGOMA STEEL GROUP | Société Générale vs. FORMPIPE SOFTWARE AB |
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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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