Correlation Between Vestjysk Bank and Nordfyns Bank
Can any of the company-specific risk be diversified away by investing in both Vestjysk 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 Vestjysk 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 Vestjysk Bank AS and Nordfyns Bank AS, you can compare the effects of market volatilities on Vestjysk 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 Vestjysk Bank with a short position of Nordfyns Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestjysk Bank and Nordfyns Bank.
Diversification Opportunities for Vestjysk Bank and Nordfyns Bank
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vestjysk and Nordfyns is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vestjysk 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 Vestjysk 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 Vestjysk 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 Vestjysk Bank i.e., Vestjysk Bank and Nordfyns Bank go up and down completely randomly.
Pair Corralation between Vestjysk Bank and Nordfyns Bank
Assuming the 90 days trading horizon Vestjysk Bank is expected to generate 1.11 times less return on investment than Nordfyns Bank. In addition to that, Vestjysk Bank is 1.03 times more volatile than Nordfyns Bank AS. It trades about 0.05 of its total potential returns per unit of risk. Nordfyns Bank AS is currently generating about 0.06 per unit of volatility. If you would invest 25,100 in Nordfyns Bank AS on November 7, 2024 and sell it today you would earn a total of 9,300 from holding Nordfyns Bank AS or generate 37.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestjysk Bank AS vs. Nordfyns Bank AS
Performance |
| Timeline |
| Vestjysk Bank AS |
| Nordfyns Bank AS |
Vestjysk Bank and Nordfyns Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestjysk Bank and Nordfyns Bank
The main advantage of trading using opposite Vestjysk Bank and Nordfyns Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestjysk 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.| Vestjysk Bank vs. Spar Nord Bank | Vestjysk Bank vs. Sydbank AS | Vestjysk Bank vs. Ringkjoebing Landbobank AS | Vestjysk Bank vs. Alm Brand |
| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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