Correlation Between Danske Andelskassers and Nykredit Invest

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

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

Diversification Opportunities for Danske Andelskassers and Nykredit Invest

-0.65

Correlation Coefficient

Danske Andelskassers  Nykredit Invest

Excellent diversification

The 3 months correlation between Danske and Nykredit is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Danske Andelskassers Bank and Nykredit Invest Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nykredit Invest Danske and Danske Andelskassers 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 Danske Andelskassers Bank are associated (or correlated) with Nykredit Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nykredit Invest Danske has no effect on the direction of Danske Andelskassers i.e., Danske Andelskassers and Nykredit Invest go up and down completely randomly.

Pair Corralation between Danske Andelskassers and Nykredit Invest

Assuming the 90 days trading horizon Danske Andelskassers Bank is expected to generate 1.71 times more return on investment than Nykredit Invest. However, Danske Andelskassers is 1.71 times more volatile than Nykredit Invest Danske. It trades about 0.13 of its potential returns per unit of risk. Nykredit Invest Danske is currently generating about -0.05 per unit of risk. If you would invest  1,190  in Danske Andelskassers Bank on October 13, 2024 and sell it today you would earn a total of  350.00  from holding Danske Andelskassers Bank or generate 29.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.32%
Values	Daily Returns

Danske Andelskassers Bank  vs.  Nykredit Invest Danske

Danske Andelskassers Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Andelskassers Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Danske Andelskassers displayed solid returns over the last few months and may actually be approaching a breakup point.

Nykredit Invest Danske

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nykredit Invest Danske has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Danske Andelskassers and Nykredit Invest

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

The idea behind Danske Andelskassers Bank and Nykredit Invest Danske 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..