Correlation Between Bank of Utica and Danske Bank

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

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

Diversification Opportunities for Bank of Utica and Danske Bank

-0.65

Correlation Coefficient

Bank of Utica  Danske Bank

Excellent diversification

The 3 months correlation between Bank and Danske is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Utica and Danske Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Bank AS and Bank of Utica 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 Bank of Utica are associated (or correlated) with Danske Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Bank AS has no effect on the direction of Bank of Utica i.e., Bank of Utica and Danske Bank go up and down completely randomly.

Pair Corralation between Bank of Utica and Danske Bank

Given the investment horizon of 90 days Bank of Utica is expected to generate 0.58 times more return on investment than Danske Bank. However, Bank of Utica is 1.72 times less risky than Danske Bank. It trades about 0.27 of its potential returns per unit of risk. Danske Bank AS is currently generating about -0.06 per unit of risk. If you would invest  42,600  in Bank of Utica on September 5, 2024 and sell it today you would earn a total of  6,200  from holding Bank of Utica or generate 14.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Bank of Utica  vs.  Danske Bank AS

Bank of Utica

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Utica are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bank of Utica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Danske Bank AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danske Bank AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Danske 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 Bank of Utica and Danske Bank

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

The idea behind Bank of Utica and Danske 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.