Correlation Between Vestjysk Bank and Skjern Bank
Can any of the company-specific risk be diversified away by investing in both Vestjysk Bank and Skjern 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 Skjern 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 Skjern Bank AS, you can compare the effects of market volatilities on Vestjysk Bank and Skjern 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 Skjern Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestjysk Bank and Skjern Bank.
Diversification Opportunities for Vestjysk Bank and Skjern Bank
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vestjysk and Skjern is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vestjysk Bank AS and Skjern Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skjern 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 Skjern Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skjern Bank AS has no effect on the direction of Vestjysk Bank i.e., Vestjysk Bank and Skjern Bank go up and down completely randomly.
Pair Corralation between Vestjysk Bank and Skjern Bank
Assuming the 90 days trading horizon Vestjysk Bank AS is expected to generate 0.6 times more return on investment than Skjern Bank. However, Vestjysk Bank AS is 1.67 times less risky than Skjern Bank. It trades about -0.13 of its potential returns per unit of risk. Skjern Bank AS is currently generating about -0.2 per unit of risk. If you would invest 415.00 in Vestjysk Bank AS on September 1, 2024 and sell it today you would lose (7.00) from holding Vestjysk Bank AS or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestjysk Bank AS vs. Skjern Bank AS
Performance |
| Timeline |
| Vestjysk Bank AS |
| Skjern Bank AS |
Vestjysk Bank and Skjern Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestjysk Bank and Skjern Bank
The main advantage of trading using opposite Vestjysk Bank and Skjern Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestjysk Bank position performs unexpectedly, Skjern 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 Skjern Bank will offset losses from the drop in Skjern Bank's long position.| Vestjysk Bank vs. Sydbank AS | Vestjysk Bank vs. Jyske Bank AS | Vestjysk Bank vs. Alm Brand | Vestjysk Bank vs. Nordea Bank Abp |
| Skjern Bank vs. Laan Spar Bank | Skjern Bank vs. Kreditbanken AS | Skjern Bank vs. Nordea Bank Abp | Skjern Bank vs. Formuepleje Mix Medium |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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