Correlation Between Swedbank and Jyske Bank

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

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

Diversification Opportunities for Swedbank and Jyske Bank

-0.31

Correlation Coefficient

Swedbank  Jyske Bank

Very good diversification

The 3 months correlation between Swedbank and Jyske is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB 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 Swedbank 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 Swedbank AB 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 Swedbank i.e., Swedbank and Jyske Bank go up and down completely randomly.

Pair Corralation between Swedbank and Jyske Bank

Assuming the 90 days horizon Swedbank AB is expected to generate 3.52 times more return on investment than Jyske Bank. However, Swedbank is 3.52 times more volatile than Jyske Bank AS. It trades about 0.2 of its potential returns per unit of risk. Jyske Bank AS is currently generating about 0.13 per unit of risk. If you would invest  1,810  in Swedbank AB on December 30, 2024 and sell it today you would earn a total of  529.00  from holding Swedbank AB or generate 29.23% return on investment over 90 days.

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

Swedbank AB  vs.  Jyske Bank AS

Swedbank AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Swedbank showed solid returns over the last few months and may actually be approaching a breakup point.

Jyske Bank AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jyske Bank AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Jyske Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Swedbank and Jyske Bank

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

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.