Correlation Between Nordea Bank and Pets At
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Pets At 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 Nordea Bank and Pets At into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordea Bank Abp and Pets at Home, you can compare the effects of market volatilities on Nordea Bank and Pets At 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 Nordea Bank with a short position of Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Pets At.
Diversification Opportunities for Nordea Bank and Pets At
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordea and Pets is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home and Nordea Bank 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 Nordea Bank Abp are associated (or correlated) with Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Nordea Bank i.e., Nordea Bank and Pets At go up and down completely randomly.
Pair Corralation between Nordea Bank and Pets At
Assuming the 90 days trading horizon Nordea Bank is expected to generate 1.22 times less return on investment than Pets At. But when comparing it to its historical volatility, Nordea Bank Abp is 2.21 times less risky than Pets At. It trades about 0.36 of its potential returns per unit of risk. Pets at Home is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 20,540 in Pets at Home on November 6, 2024 and sell it today you would earn a total of 1,840 from holding Pets at Home or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Pets at Home
Performance |
| Timeline |
| Nordea Bank Abp |
| Pets at Home |
Nordea Bank and Pets At Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Pets At
The main advantage of trading using opposite Nordea Bank and Pets At positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Pets At 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 Pets At will offset losses from the drop in Pets At's long position.| Nordea Bank vs. Take Two Interactive Software | Nordea Bank vs. Bigblu Broadband PLC | Nordea Bank vs. Accesso Technology Group | Nordea Bank vs. Impax Asset Management |
| Pets At vs. Waste Management | Pets At vs. Advanced Medical Solutions | Pets At vs. Alliance Data Systems | Pets At vs. Jupiter Fund Management |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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