Correlation Between Bitcoin and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both Bitcoin 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 Bitcoin and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and Nordea Bank Abp, you can compare the effects of market volatilities on Bitcoin 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 Bitcoin with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Nordea Bank.
Diversification Opportunities for Bitcoin and Nordea Bank
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bitcoin and Nordea is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin 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 Bitcoin 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 Bitcoin 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 Bitcoin i.e., Bitcoin and Nordea Bank go up and down completely randomly.
Pair Corralation between Bitcoin and Nordea Bank
Assuming the 90 days trading horizon Bitcoin is expected to under-perform the Nordea Bank. In addition to that, Bitcoin is 2.05 times more volatile than Nordea Bank Abp. It trades about -0.16 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 12,450 in Nordea Bank Abp on October 11, 2024 and sell it today you would earn a total of 93.00 from holding Nordea Bank Abp or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Bitcoin vs. Nordea Bank Abp
Performance |
| Timeline |
| Bitcoin |
| Nordea Bank Abp |
Bitcoin and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and Nordea Bank
The main advantage of trading using opposite Bitcoin and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin 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.The idea behind Bitcoin and Nordea Bank Abp 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.| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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