Correlation Between Sparindex INDEX and Djurslands Bank

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

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

Diversification Opportunities for Sparindex INDEX and Djurslands Bank

0.17

Correlation Coefficient

Sparindex INDEX  Djurslands Bank

Average diversification

The 3 months correlation between Sparindex and Djurslands is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sparindex INDEX Bredygtige and Djurslands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Djurslands Bank and Sparindex INDEX 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 Sparindex INDEX Bredygtige are associated (or correlated) with Djurslands Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Djurslands Bank has no effect on the direction of Sparindex INDEX i.e., Sparindex INDEX and Djurslands Bank go up and down completely randomly.

Pair Corralation between Sparindex INDEX and Djurslands Bank

Assuming the 90 days trading horizon Sparindex INDEX is expected to generate 12.36 times less return on investment than Djurslands Bank. But when comparing it to its historical volatility, Sparindex INDEX Bredygtige is 1.87 times less risky than Djurslands Bank. It trades about 0.01 of its potential returns per unit of risk. Djurslands Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  58,000  in Djurslands Bank on December 27, 2024 and sell it today you would earn a total of  6,000  from holding Djurslands Bank or generate 10.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Sparindex INDEX Bredygtige  vs.  Djurslands Bank

Sparindex INDEX Bred

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sparindex INDEX Bredygtige are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Sparindex INDEX is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Djurslands Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Djurslands Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Djurslands Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sparindex INDEX and Djurslands Bank

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

The idea behind Sparindex INDEX Bredygtige and Djurslands Bank 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.