Correlation Between Spring Valley and Danske Bank
Can any of the company-specific risk be diversified away by investing in both Spring Valley 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 Spring Valley and Danske Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spring Valley Acquisition and Danske Bank AS, you can compare the effects of market volatilities on Spring Valley 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 Spring Valley with a short position of Danske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spring Valley and Danske Bank.
Diversification Opportunities for Spring Valley and Danske Bank
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spring and Danske is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition 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 Spring Valley 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 Spring Valley Acquisition 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 Spring Valley i.e., Spring Valley and Danske Bank go up and down completely randomly.
Pair Corralation between Spring Valley and Danske Bank
Given the investment horizon of 90 days Spring Valley Acquisition is expected to generate 0.06 times more return on investment than Danske Bank. However, Spring Valley Acquisition is 15.99 times less risky than Danske Bank. It trades about 0.18 of its potential returns per unit of risk. Danske Bank AS is currently generating about -0.24 per unit of risk. If you would invest 1,124 in Spring Valley Acquisition on October 22, 2024 and sell it today you would earn a total of 3.00 from holding Spring Valley Acquisition or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Spring Valley Acquisition vs. Danske Bank AS
Performance |
| Timeline |
| Spring Valley Acquisition |
| Danske Bank AS |
Spring Valley and Danske Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spring Valley and Danske Bank
The main advantage of trading using opposite Spring Valley and Danske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spring Valley 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.The idea behind Spring Valley Acquisition and Danske Bank AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Danske Bank vs. Eurobank Ergasias SA | Danske Bank vs. National Bank of | Danske Bank vs. Piraeus Bank SA | Danske Bank vs. Lloyds Banking Group |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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