# Correlation Between Spar Nord and Jyske Bank

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Can any of the company-specific risk be diversified away by investing in both Spar Nord and Jyske 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 Spar Nord and Jyske Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spar Nord Bank and Jyske Bank AS, you can compare the effects of market volatilities on Spar Nord and Jyske 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 Spar Nord with a short position of Jyske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spar Nord and Jyske Bank.

## Diversification Opportunities for Spar Nord and Jyske Bank

 0.34 Correlation Coefficient

### Weak diversification

The 3 months correlation between Spar and Jyske is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Spar Nord Bank and Jyske Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jyske Bank AS and Spar Nord 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 Spar Nord Bank are associated (or correlated) with Jyske Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jyske Bank AS has no effect on the direction of Spar Nord i.e., Spar Nord and Jyske Bank go up and down completely randomly.

## Pair Corralation between Spar Nord and Jyske Bank

Assuming the 90 days trading horizon Spar Nord Bank is expected to under-perform the Jyske Bank. In addition to that, Spar Nord is 1.58 times more volatile than Jyske Bank AS. It trades about -0.26 of its total potential returns per unit of risk. Jyske Bank AS is currently generating about 0.02 per unit of volatility. If you would invest  51,900  in Jyske Bank AS on June 12, 2024 and sell it today you would earn a total of  100.00  from holding Jyske Bank AS or generate 0.19% return on investment over 90 days.
 Time Period 3 Months [change] Direction Moves Together Strength Very Weak Accuracy 100.0% Values Daily Returns

## Spar Nord Bank  vs.  Jyske Bank AS

 Performance
 Timeline
 Spar Nord Bank Correlation Profile

### 1 of 100

 Weak Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Spar Nord Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Spar Nord is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
 Performance Backtest Predict
 Jyske Bank AS Correlation Profile

### 0 of 100

 Weak Strong
Very Weak
Over the last 90 days Jyske Bank AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jyske Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
 Performance Backtest Predict

## Spar Nord and Jyske Bank Volatility Contrast

 Predicted Return Density
 Returns

## Pair Trading with Spar Nord and Jyske Bank

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