Correlation Between Commerzbank and DNB BANK
Can any of the company-specific risk be diversified away by investing in both Commerzbank 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 Commerzbank and DNB BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG and DNB BANK ASA, you can compare the effects of market volatilities on Commerzbank 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 Commerzbank with a short position of DNB BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and DNB BANK.
Diversification Opportunities for Commerzbank and DNB BANK
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commerzbank and DNB is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG 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 Commerzbank 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 Commerzbank AG 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 Commerzbank i.e., Commerzbank and DNB BANK go up and down completely randomly.
Pair Corralation between Commerzbank and DNB BANK
Assuming the 90 days trading horizon Commerzbank AG is expected to generate 0.82 times more return on investment than DNB BANK. However, Commerzbank AG is 1.22 times less risky than DNB BANK. It trades about 0.01 of its potential returns per unit of risk. DNB BANK ASA is currently generating about -0.06 per unit of risk. If you would invest 1,510 in Commerzbank AG on September 23, 2024 and sell it today you would earn a total of 0.00 from holding Commerzbank AG or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Commerzbank AG vs. DNB BANK ASA
Performance |
Timeline |
Commerzbank AG |
DNB BANK ASA |
Commerzbank and DNB BANK Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Commerzbank and DNB BANK
The main advantage of trading using opposite Commerzbank and DNB BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank 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.Commerzbank vs. BNP Paribas SA | Commerzbank vs. DNB BANK ASA | Commerzbank vs. Deutsche Bank Aktiengesellschaft | Commerzbank vs. Socit Gnrale Socit |
DNB BANK vs. BNP Paribas SA | DNB BANK vs. Deutsche Bank Aktiengesellschaft | DNB BANK vs. Socit Gnrale Socit | DNB BANK vs. Commerzbank AG |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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