Correlation Between Strategic Education and DNB BANK

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

By analyzing existing cross correlation between Strategic Education and DNB BANK ASA, you can compare the effects of market volatilities on Strategic Education and DNB 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 Strategic Education with a short position of DNB BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and DNB BANK.

Diversification Opportunities for Strategic Education and DNB BANK

-0.67

Correlation Coefficient

Strategic Education  DNB BANK

Excellent diversification

The 3 months correlation between Strategic and DNB is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education and DNB BANK ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNB BANK ASA and Strategic Education 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 Strategic Education are associated (or correlated) with DNB BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNB BANK ASA has no effect on the direction of Strategic Education i.e., Strategic Education and DNB BANK go up and down completely randomly.

Pair Corralation between Strategic Education and DNB BANK

Assuming the 90 days horizon Strategic Education is expected to under-perform the DNB BANK. In addition to that, Strategic Education is 1.61 times more volatile than DNB BANK ASA. It trades about -0.09 of its total potential returns per unit of risk. DNB BANK ASA is currently generating about 0.24 per unit of volatility. If you would invest  1,892  in DNB BANK ASA on December 22, 2024 and sell it today you would earn a total of  476.00  from holding DNB BANK ASA or generate 25.16% return on investment over 90 days.

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

Strategic Education  vs.  DNB BANK ASA

Strategic Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

DNB BANK ASA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DNB BANK ASA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DNB BANK reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strategic Education and DNB BANK

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

The idea behind Strategic Education and DNB BANK ASA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.