Correlation Between SMA Solar and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Nordea Bank Abp, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Nordea Bank.
Diversification Opportunities for SMA Solar and Nordea Bank
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SMA and Nordea is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology 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 SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Nordea Bank go up and down completely randomly.
Pair Corralation between SMA Solar and Nordea Bank
Assuming the 90 days trading horizon SMA Solar is expected to generate 2.57 times less return on investment than Nordea Bank. In addition to that, SMA Solar is 3.5 times more volatile than Nordea Bank Abp. It trades about 0.06 of its total potential returns per unit of risk. Nordea Bank Abp is currently generating about 0.57 per unit of volatility. If you would invest 11,880 in Nordea Bank Abp on October 28, 2024 and sell it today you would earn a total of 1,427 from holding Nordea Bank Abp or generate 12.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Nordea Bank Abp
Performance |
| Timeline |
| SMA Solar Technology |
| Nordea Bank Abp |
SMA Solar and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Nordea Bank
The main advantage of trading using opposite SMA Solar and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Ashtead Technology Holdings | SMA Solar vs. Concurrent Technologies Plc | SMA Solar vs. Silvercorp Metals | SMA Solar vs. Capital Metals PLC |
| Nordea Bank vs. Various Eateries PLC | Nordea Bank vs. SoftBank Group Corp | Nordea Bank vs. Intermediate Capital Group | Nordea Bank vs. Catalyst 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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