Correlation Between Skjern Bank and Nordfyns Bank
Can any of the company-specific risk be diversified away by investing in both Skjern Bank and Nordfyns 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 Skjern Bank and Nordfyns Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skjern Bank AS and Nordfyns Bank AS, you can compare the effects of market volatilities on Skjern Bank and Nordfyns 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 Skjern Bank with a short position of Nordfyns Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skjern Bank and Nordfyns Bank.
Diversification Opportunities for Skjern Bank and Nordfyns Bank
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skjern and Nordfyns is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Skjern Bank AS and Nordfyns Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordfyns Bank AS and Skjern 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 Skjern Bank AS are associated (or correlated) with Nordfyns Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordfyns Bank AS has no effect on the direction of Skjern Bank i.e., Skjern Bank and Nordfyns Bank go up and down completely randomly.
Pair Corralation between Skjern Bank and Nordfyns Bank
Assuming the 90 days trading horizon Skjern Bank AS is expected to under-perform the Nordfyns Bank. In addition to that, Skjern Bank is 1.66 times more volatile than Nordfyns Bank AS. It trades about -0.31 of its total potential returns per unit of risk. Nordfyns Bank AS is currently generating about -0.39 per unit of volatility. If you would invest 34,200 in Nordfyns Bank AS on August 28, 2024 and sell it today you would lose (2,000) from holding Nordfyns Bank AS or give up 5.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skjern Bank AS vs. Nordfyns Bank AS
Performance |
| Timeline |
| Skjern Bank AS |
| Nordfyns Bank AS |
Skjern Bank and Nordfyns Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skjern Bank and Nordfyns Bank
The main advantage of trading using opposite Skjern Bank and Nordfyns Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skjern Bank position performs unexpectedly, Nordfyns 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 Nordfyns Bank will offset losses from the drop in Nordfyns Bank's long position.| Skjern Bank vs. Dataproces Group AS | Skjern Bank vs. cBrain AS | Skjern Bank vs. ALK Abell AS | Skjern Bank vs. ChemoMetec AS |
| Nordfyns Bank vs. Dataproces Group AS | Nordfyns Bank vs. cBrain AS | Nordfyns Bank vs. ALK Abell AS | Nordfyns Bank vs. ChemoMetec AS |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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