Correlation Between Danske Invest and Jyske Bank

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

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

Diversification Opportunities for Danske Invest and Jyske Bank

0.74

Correlation Coefficient

Danske Invest  Jyske Bank

Poor diversification

The 3 months correlation between Danske and Jyske is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Danske Invest Europa 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 Danske Invest 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 Invest Europa 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 Danske Invest i.e., Danske Invest and Jyske Bank go up and down completely randomly.

Pair Corralation between Danske Invest and Jyske Bank

Assuming the 90 days trading horizon Danske Invest Europa is expected to generate 0.45 times more return on investment than Jyske Bank. However, Danske Invest Europa is 2.23 times less risky than Jyske Bank. It trades about -0.06 of its potential returns per unit of risk. Jyske Bank AS is currently generating about -0.08 per unit of risk. If you would invest  13,521  in Danske Invest Europa on August 31, 2024 and sell it today you would lose (434.00) from holding Danske Invest Europa or give up 3.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Danske Invest Europa  vs.  Jyske Bank AS

Danske Invest Europa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danske Invest Europa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Danske Invest is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Jyske Bank AS

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Danske Invest and Jyske Bank

The main advantage of trading using opposite Danske Invest and Jyske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Invest 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.

The idea behind Danske Invest Europa 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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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.