Correlation Between BankInvest Value and Sydbank AS

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

By analyzing existing cross correlation between BankInvest Value Globale and Sydbank AS, you can compare the effects of market volatilities on BankInvest Value and Sydbank AS 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 BankInvest Value with a short position of Sydbank AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInvest Value and Sydbank AS.

Diversification Opportunities for BankInvest Value and Sydbank AS

0.74

Correlation Coefficient

BankInvest Value  Sydbank AS

Poor diversification

The 3 months correlation between BankInvest and Sydbank is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Value Globale and Sydbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank AS and BankInvest Value 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 BankInvest Value Globale are associated (or correlated) with Sydbank AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank AS has no effect on the direction of BankInvest Value i.e., BankInvest Value and Sydbank AS go up and down completely randomly.

Pair Corralation between BankInvest Value and Sydbank AS

Assuming the 90 days trading horizon BankInvest Value is expected to generate 1.31 times less return on investment than Sydbank AS. But when comparing it to its historical volatility, BankInvest Value Globale is 1.92 times less risky than Sydbank AS. It trades about 0.23 of its potential returns per unit of risk. Sydbank AS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  33,260  in Sydbank AS on September 14, 2024 and sell it today you would earn a total of  4,560  from holding Sydbank AS or generate 13.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	82.81%
Values	Daily Returns

BankInvest Value Globale  vs.  Sydbank AS

BankInvest Value Globale

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Value Globale are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, BankInvest Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sydbank AS

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank AS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Sydbank AS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BankInvest Value and Sydbank AS

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

The idea behind BankInvest Value Globale and Sydbank 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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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.