Correlation Between Tryg AS and Nordfyns Bank
Can any of the company-specific risk be diversified away by investing in both Tryg AS 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 Tryg AS and Nordfyns Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tryg AS and Nordfyns Bank AS, you can compare the effects of market volatilities on Tryg AS 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 Tryg AS with a short position of Nordfyns Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tryg AS and Nordfyns Bank.
Diversification Opportunities for Tryg AS and Nordfyns Bank
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tryg and Nordfyns is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tryg 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 Tryg 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 Tryg 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 Tryg AS i.e., Tryg AS and Nordfyns Bank go up and down completely randomly.
Pair Corralation between Tryg AS and Nordfyns Bank
Assuming the 90 days trading horizon Tryg AS is expected to generate 1.14 times less return on investment than Nordfyns Bank. In addition to that, Tryg AS is 1.11 times more volatile than Nordfyns Bank AS. It trades about 0.35 of its total potential returns per unit of risk. Nordfyns Bank AS is currently generating about 0.44 per unit of volatility. If you would invest 33,600 in Nordfyns Bank AS on November 28, 2024 and sell it today you would earn a total of 2,400 from holding Nordfyns Bank AS or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tryg AS vs. Nordfyns Bank AS
Performance |
| Timeline |
| Tryg AS |
| Nordfyns Bank AS |
Tryg AS and Nordfyns Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tryg AS and Nordfyns Bank
The main advantage of trading using opposite Tryg AS and Nordfyns Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tryg AS 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.The idea behind Tryg AS and Nordfyns 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.| Nordfyns Bank vs. Skjern Bank AS | Nordfyns Bank vs. Lollands Bank | Nordfyns Bank vs. Djurslands Bank | Nordfyns Bank vs. Moens Bank 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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