Correlation Between Nordea 1 and DNB Norge

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Can any of the company-specific risk be diversified away by investing in both Nordea 1 and DNB Norge 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 1 and DNB Norge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordea 1 and DNB Norge Selektiv, you can compare the effects of market volatilities on Nordea 1 and DNB Norge 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 1 with a short position of DNB Norge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea 1 and DNB Norge.

Diversification Opportunities for Nordea 1 and DNB Norge

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nordea and DNB is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nordea 1 and DNB Norge Selektiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNB Norge Selektiv and Nordea 1 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 1 are associated (or correlated) with DNB Norge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNB Norge Selektiv has no effect on the direction of Nordea 1 i.e., Nordea 1 and DNB Norge go up and down completely randomly.

Pair Corralation between Nordea 1 and DNB Norge

Assuming the 90 days trading horizon Nordea 1 is expected to under-perform the DNB Norge. In addition to that, Nordea 1 is 1.02 times more volatile than DNB Norge Selektiv. It trades about -0.18 of its total potential returns per unit of risk. DNB Norge Selektiv is currently generating about 0.03 per unit of volatility. If you would invest  172,302  in DNB Norge Selektiv on November 28, 2024 and sell it today you would earn a total of  631.00  from holding DNB Norge Selektiv or generate 0.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Nordea 1   vs.  DNB Norge Selektiv

 Performance 
       Timeline  
Nordea 1 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Nordea 1 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nordea 1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
DNB Norge Selektiv 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in DNB Norge Selektiv are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, DNB Norge is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Nordea 1 and DNB Norge Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nordea 1 and DNB Norge

The main advantage of trading using opposite Nordea 1 and DNB Norge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea 1 position performs unexpectedly, DNB Norge 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 DNB Norge will offset losses from the drop in DNB Norge's long position.
Nordea 1 vs. KLP AksjeNorge Indeks
Nordea 1 vs. Franklin Floating Rate
Nordea 1 vs. Nordnet Teknologi Indeks
Nordea 1 vs. DNB Norge Selektiv
The idea behind Nordea 1 and DNB Norge Selektiv 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.
DNB Norge vs. KLP AksjeNorge Indeks
DNB Norge vs. Nordea 1
DNB Norge vs. Franklin Floating Rate
DNB Norge vs. Nordnet Teknologi Indeks
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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