Correlation Between Alandsbanken Abp and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both Alandsbanken Abp 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 Alandsbanken Abp and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alandsbanken Abp B and Nordea Bank Abp, you can compare the effects of market volatilities on Alandsbanken Abp 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 Alandsbanken Abp with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alandsbanken Abp and Nordea Bank.
Diversification Opportunities for Alandsbanken Abp and Nordea Bank
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alandsbanken and Nordea is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Alandsbanken Abp B 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 Alandsbanken Abp 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 Alandsbanken Abp B 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 Alandsbanken Abp i.e., Alandsbanken Abp and Nordea Bank go up and down completely randomly.
Pair Corralation between Alandsbanken Abp and Nordea Bank
Assuming the 90 days trading horizon Alandsbanken Abp is expected to generate 4.57 times less return on investment than Nordea Bank. In addition to that, Alandsbanken Abp is 1.06 times more volatile than Nordea Bank Abp. It trades about 0.01 of its total potential returns per unit of risk. Nordea Bank Abp is currently generating about 0.04 per unit of volatility. If you would invest 853.00 in Nordea Bank Abp on August 26, 2024 and sell it today you would earn a total of 210.00 from holding Nordea Bank Abp or generate 24.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alandsbanken Abp B vs. Nordea Bank Abp
Performance |
| Timeline |
| Alandsbanken Abp B |
| Nordea Bank Abp |
Alandsbanken Abp and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alandsbanken Abp and Nordea Bank
The main advantage of trading using opposite Alandsbanken Abp and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alandsbanken Abp 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.| Alandsbanken Abp vs. Nordea Bank Abp | Alandsbanken Abp vs. Fortum Oyj | Alandsbanken Abp vs. UPM Kymmene Oyj | Alandsbanken Abp vs. Neste Oil Oyj |
| Nordea Bank vs. Sampo Oyj A | Nordea Bank vs. Fortum Oyj | Nordea Bank vs. UPM Kymmene Oyj | Nordea Bank vs. Neste Oil Oyj |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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