Correlation Between Nordea 1 and Nordnet Teknologi

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

Diversification Opportunities for Nordea 1 and Nordnet Teknologi

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nordea and Nordnet is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nordea 1 and Nordnet Teknologi Indeks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordnet Teknologi Indeks 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 Nordnet Teknologi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordnet Teknologi Indeks has no effect on the direction of Nordea 1 i.e., Nordea 1 and Nordnet Teknologi go up and down completely randomly.

Pair Corralation between Nordea 1 and Nordnet Teknologi

Assuming the 90 days trading horizon Nordea 1 is expected to generate 0.59 times more return on investment than Nordnet Teknologi. However, Nordea 1 is 1.68 times less risky than Nordnet Teknologi. It trades about 0.12 of its potential returns per unit of risk. Nordnet Teknologi Indeks is currently generating about -0.02 per unit of risk. If you would invest  39,963  in Nordea 1 on October 20, 2024 and sell it today you would earn a total of  594.00  from holding Nordea 1 or generate 1.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy94.74%
ValuesDaily Returns

Nordea 1   vs.  Nordnet Teknologi Indeks

 Performance 
       Timeline  
Nordea 1 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Nordea 1 are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nordea 1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Nordnet Teknologi Indeks 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Nordnet Teknologi Indeks are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy primary indicators, Nordnet Teknologi is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Nordea 1 and Nordnet Teknologi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nordea 1 and Nordnet Teknologi

The main advantage of trading using opposite Nordea 1 and Nordnet Teknologi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea 1 position performs unexpectedly, Nordnet Teknologi 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 Nordnet Teknologi will offset losses from the drop in Nordnet Teknologi's long position.
Nordea 1 vs. Franklin Floating Rate
Nordea 1 vs. Franklin Floating Rate
Nordea 1 vs. Franklin Floating Rate
Nordea 1 vs. KLP Aksje Fremvoksende
The idea behind Nordea 1 and Nordnet Teknologi Indeks 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.
Nordnet Teknologi vs. Franklin Floating Rate
Nordnet Teknologi vs. Franklin Floating Rate
Nordnet Teknologi vs. Franklin Floating Rate
Nordnet Teknologi vs. KLP Aksje Fremvoksende
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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