Correlation Between LED IBond and Danske Invest

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

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

Diversification Opportunities for LED IBond and Danske Invest

0.74

Correlation Coefficient

LED IBond  Danske Invest

Poor diversification

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

Pair Corralation between LED IBond and Danske Invest

Assuming the 90 days trading horizon LED iBond International is expected to under-perform the Danske Invest. In addition to that, LED IBond is 202.21 times more volatile than Danske Invest . It trades about -0.01 of its total potential returns per unit of risk. Danske Invest is currently generating about 0.14 per unit of volatility. If you would invest  9,411  in Danske Invest on September 22, 2024 and sell it today you would earn a total of  19.00  from holding Danske Invest or generate 0.2% return on investment over 90 days.

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

LED iBond International  vs.  Danske Invest

LED iBond International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LED iBond International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, LED IBond displayed solid returns over the last few months and may actually be approaching a breakup point.

Danske Invest

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Invest are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Danske Invest is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LED IBond and Danske Invest

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

The idea behind LED iBond International and Danske Invest 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.