Correlation Between BankInvestEuropiske and Danske Invest

Can any of the company-specific risk be diversified away by investing in both BankInvestEuropiske and Danske Invest 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 BankInvestEuropiske and Danske Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BankInvestEuropiske Akt Ansv and Danske Invest Fjernsten, you can compare the effects of market volatilities on BankInvestEuropiske and Danske Invest 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 BankInvestEuropiske with a short position of Danske Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInvestEuropiske and Danske Invest.

Diversification Opportunities for BankInvestEuropiske and Danske Invest

-0.42

Correlation Coefficient

BankInvestEuropiske  Danske Invest

Very good diversification

The 3 months correlation between BankInvestEuropiske and Danske is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding BankInvestEuropiske Akt Ansv and Danske Invest Fjernsten in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Invest Fjernsten and BankInvestEuropiske 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 BankInvestEuropiske Akt Ansv are associated (or correlated) with Danske Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Invest Fjernsten has no effect on the direction of BankInvestEuropiske i.e., BankInvestEuropiske and Danske Invest go up and down completely randomly.

Pair Corralation between BankInvestEuropiske and Danske Invest

Assuming the 90 days trading horizon BankInvestEuropiske is expected to generate 1.31 times less return on investment than Danske Invest. But when comparing it to its historical volatility, BankInvestEuropiske Akt Ansv is 1.01 times less risky than Danske Invest. It trades about 0.08 of its potential returns per unit of risk. Danske Invest Fjernsten is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,675  in Danske Invest Fjernsten on February 4, 2024 and sell it today you would earn a total of  125.00  from holding Danske Invest Fjernsten or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	45.45%
Values	Daily Returns

BankInvestEuropiske Akt Ansv  vs.  Danske Invest Fjernsten

BankInvestEuropiske Akt

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days BankInvestEuropiske Akt Ansv has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unfluctuating basic indicators, BankInvestEuropiske sustained solid returns over the last few months and may actually be approaching a breakup point.

Danske Invest Fjernsten

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Invest Fjernsten are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking indicators, Danske Invest may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with BankInvestEuropiske and Danske Invest

The main advantage of trading using opposite BankInvestEuropiske and Danske Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BankInvestEuropiske position performs unexpectedly, Danske Invest 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 Invest will offset losses from the drop in Danske Invest's long position.

The idea behind BankInvestEuropiske Akt Ansv and Danske Invest Fjernsten 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.