Correlation Between Schweizerische Nationalbank and Danske Bank

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

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

Diversification Opportunities for Schweizerische Nationalbank and Danske Bank

0.49

Correlation Coefficient

Schweizerische Nationalbank  Danske Bank

Very weak diversification

The 3 months correlation between Schweizerische and Danske is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank 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 Schweizerische Nationalbank 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 Schweizerische Nationalbank 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 Schweizerische Nationalbank i.e., Schweizerische Nationalbank and Danske Bank go up and down completely randomly.

Pair Corralation between Schweizerische Nationalbank and Danske Bank

Assuming the 90 days horizon Schweizerische Nationalbank is expected to under-perform the Danske Bank. In addition to that, Schweizerische Nationalbank is 1.28 times more volatile than Danske Bank AS. It trades about -0.09 of its total potential returns per unit of risk. Danske Bank AS is currently generating about -0.08 per unit of volatility. If you would invest  1,543  in Danske Bank AS on September 2, 2024 and sell it today you would lose (119.00) from holding Danske Bank AS or give up 7.71% of portfolio value over 90 days.

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

Schweizerische Nationalbank  vs.  Danske Bank AS

Schweizerische Nationalbank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schweizerische Nationalbank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Schweizerische Nationalbank and Danske Bank

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

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.