Correlation Between Rheinmetall and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Nordea 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 Rheinmetall and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Nordea Bank Abp, you can compare the effects of market volatilities on Rheinmetall and Nordea 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 Rheinmetall with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Nordea Bank.
Diversification Opportunities for Rheinmetall and Nordea Bank
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rheinmetall and Nordea is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Nordea Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Bank Abp and Rheinmetall 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 Rheinmetall AG are associated (or correlated) with Nordea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Bank Abp has no effect on the direction of Rheinmetall i.e., Rheinmetall and Nordea Bank go up and down completely randomly.
Pair Corralation between Rheinmetall and Nordea Bank
Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 1.73 times more return on investment than Nordea Bank. However, Rheinmetall is 1.73 times more volatile than Nordea Bank Abp. It trades about 0.19 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about 0.04 per unit of risk. If you would invest 56,440 in Rheinmetall AG on October 11, 2024 and sell it today you would earn a total of 8,280 from holding Rheinmetall AG or generate 14.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. Nordea Bank Abp
Performance |
| Timeline |
| Rheinmetall AG |
| Nordea Bank Abp |
Rheinmetall and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Nordea Bank
The main advantage of trading using opposite Rheinmetall and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Nordea 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 Nordea Bank will offset losses from the drop in Nordea Bank's long position.| Rheinmetall vs. Live Nation Entertainment | Rheinmetall vs. Atresmedia | Rheinmetall vs. Associated British Foods | Rheinmetall vs. Costco Wholesale Corp |
| Nordea Bank vs. Intermediate Capital Group | Nordea Bank vs. Zoom Video Communications | Nordea Bank vs. One Media iP | Nordea Bank vs. Zinc Media Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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