Correlation Between Danske Bank and Baraboo Bancorporation

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

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

Diversification Opportunities for Danske Bank and Baraboo Bancorporation

0.83

Correlation Coefficient

Danske Bank  Baraboo Bancorporation

Very poor diversification

The 3 months correlation between Danske and Baraboo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Baraboo Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baraboo Bancorporation and Danske Bank 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 Bank AS are associated (or correlated) with Baraboo Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baraboo Bancorporation has no effect on the direction of Danske Bank i.e., Danske Bank and Baraboo Bancorporation go up and down completely randomly.

Pair Corralation between Danske Bank and Baraboo Bancorporation

Assuming the 90 days horizon Danske Bank AS is expected to generate 1.53 times more return on investment than Baraboo Bancorporation. However, Danske Bank is 1.53 times more volatile than Baraboo Bancorporation. It trades about 0.26 of its potential returns per unit of risk. Baraboo Bancorporation is currently generating about 0.21 per unit of risk. If you would invest  1,351  in Danske Bank AS on December 29, 2024 and sell it today you would earn a total of  391.00  from holding Danske Bank AS or generate 28.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Danske Bank AS  vs.  Baraboo Bancorp.

Danske Bank AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Bank AS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Danske Bank showed solid returns over the last few months and may actually be approaching a breakup point.

Baraboo Bancorporation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baraboo Bancorporation are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Baraboo Bancorporation sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Danske Bank and Baraboo Bancorporation

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

The idea behind Danske Bank AS and Baraboo Bancorporation 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.