Correlation Between VERISK ANLYTCS and DNB BANK

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

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

Diversification Opportunities for VERISK ANLYTCS and DNB BANK

0.8

Correlation Coefficient

VERISK ANLYTCS  DNB BANK

Very poor diversification

The 3 months correlation between VERISK and DNB is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding VERISK ANLYTCS A 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 VERISK ANLYTCS 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 VERISK ANLYTCS A 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 VERISK ANLYTCS i.e., VERISK ANLYTCS and DNB BANK go up and down completely randomly.

Pair Corralation between VERISK ANLYTCS and DNB BANK

Assuming the 90 days trading horizon VERISK ANLYTCS A is expected to under-perform the DNB BANK. But the stock apears to be less risky and, when comparing its historical volatility, VERISK ANLYTCS A is 2.49 times less risky than DNB BANK. The stock trades about -0.56 of its potential returns per unit of risk. The DNB BANK ASA is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,985  in DNB BANK ASA on October 4, 2024 and sell it today you would lose (36.00) from holding DNB BANK ASA or give up 1.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

VERISK ANLYTCS A  vs.  DNB BANK ASA

VERISK ANLYTCS A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VERISK ANLYTCS A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VERISK ANLYTCS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

DNB BANK ASA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DNB BANK ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DNB BANK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VERISK ANLYTCS and DNB BANK

The main advantage of trading using opposite VERISK ANLYTCS and DNB BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VERISK ANLYTCS 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 VERISK ANLYTCS A 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 Stocks Directory module to find actively traded stocks across global markets.