Correlation Between Nordfyns Bank and Jyske Bank

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

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

Diversification Opportunities for Nordfyns Bank and Jyske Bank

0.78

Correlation Coefficient

Nordfyns Bank  Jyske Bank

Poor diversification

The 3 months correlation between Nordfyns and Jyske is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nordfyns Bank AS 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 Nordfyns 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 Nordfyns Bank AS 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 Nordfyns Bank i.e., Nordfyns Bank and Jyske Bank go up and down completely randomly.

Pair Corralation between Nordfyns Bank and Jyske Bank

Assuming the 90 days trading horizon Nordfyns Bank is expected to generate 1.48 times less return on investment than Jyske Bank. But when comparing it to its historical volatility, Nordfyns Bank AS is 1.34 times less risky than Jyske Bank. It trades about 0.19 of its potential returns per unit of risk. Jyske Bank AS is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  49,640  in Jyske Bank AS on December 1, 2024 and sell it today you would earn a total of  8,360  from holding Jyske Bank AS or generate 16.84% return on investment over 90 days.

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

Nordfyns Bank AS  vs.  Jyske Bank AS

Nordfyns Bank AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nordfyns Bank AS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Nordfyns Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Jyske Bank AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jyske Bank AS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Jyske Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordfyns Bank and Jyske Bank

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

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.