Correlation Between Vestjysk Bank and Target
Can any of the company-specific risk be diversified away by investing in both Vestjysk Bank and Target 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 Target 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 Target, you can compare the effects of market volatilities on Vestjysk Bank and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestjysk Bank and Target.
Diversification Opportunities for Vestjysk Bank and Target
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vestjysk and Target is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vestjysk Bank AS and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Vestjysk Bank i.e., Vestjysk Bank and Target go up and down completely randomly.
Pair Corralation between Vestjysk Bank and Target
Assuming the 90 days trading horizon Vestjysk Bank AS is expected to generate 0.83 times more return on investment than Target. However, Vestjysk Bank AS is 1.21 times less risky than Target. It trades about 0.15 of its potential returns per unit of risk. Target is currently generating about -0.04 per unit of risk. If you would invest 442.00 in Vestjysk Bank AS on January 20, 2024 and sell it today you would earn a total of 13.00 from holding Vestjysk Bank AS or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Vestjysk Bank AS vs. Target
Performance |
| Timeline |
| Vestjysk Bank AS |
| Target |
Vestjysk Bank and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestjysk Bank and Target
The main advantage of trading using opposite Vestjysk Bank and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestjysk Bank position performs unexpectedly, Target 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 Target will offset losses from the drop in Target'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 |
| Target vs. Aquagold International | Target vs. Morningstar Unconstrained Allocation | Target vs. Thrivent High Yield | Target vs. Via Renewables |
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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