Correlation Between WTB Financial and Danske Bank
Can any of the company-specific risk be diversified away by investing in both WTB Financial 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 WTB Financial and Danske Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WTB Financial and Danske Bank AS, you can compare the effects of market volatilities on WTB Financial 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 WTB Financial with a short position of Danske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of WTB Financial and Danske Bank.
Diversification Opportunities for WTB Financial and Danske Bank
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WTB and Danske is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding WTB Financial 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 WTB Financial 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 WTB Financial 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 WTB Financial i.e., WTB Financial and Danske Bank go up and down completely randomly.
Pair Corralation between WTB Financial and Danske Bank
Assuming the 90 days horizon WTB Financial is expected to generate 0.4 times more return on investment than Danske Bank. However, WTB Financial is 2.49 times less risky than Danske Bank. It trades about 0.23 of its potential returns per unit of risk. Danske Bank AS is currently generating about -0.05 per unit of risk. If you would invest 29,255 in WTB Financial on August 30, 2024 and sell it today you would earn a total of 1,045 from holding WTB Financial or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
WTB Financial vs. Danske Bank AS
Performance |
| Timeline |
| WTB Financial |
| Danske Bank AS |
WTB Financial and Danske Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WTB Financial and Danske Bank
The main advantage of trading using opposite WTB Financial and Danske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WTB Financial 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 WTB Financial 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. Israel Discount Bank | Danske Bank vs. Baraboo Bancorporation | Danske Bank vs. Schweizerische Nationalbank | Danske Bank vs. Jyske 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |