Correlation Between Groenlandsbanken and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both Groenlandsbanken 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 Groenlandsbanken and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groenlandsbanken AS and Nordea Bank Abp, you can compare the effects of market volatilities on Groenlandsbanken 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 Groenlandsbanken with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groenlandsbanken and Nordea Bank.
Diversification Opportunities for Groenlandsbanken and Nordea Bank
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Groenlandsbanken and Nordea is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS 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 Groenlandsbanken 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 Groenlandsbanken AS 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 Groenlandsbanken i.e., Groenlandsbanken and Nordea Bank go up and down completely randomly.
Pair Corralation between Groenlandsbanken and Nordea Bank
Assuming the 90 days trading horizon Groenlandsbanken AS is expected to generate 0.57 times more return on investment than Nordea Bank. However, Groenlandsbanken AS is 1.75 times less risky than Nordea Bank. It trades about 0.27 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about -0.13 per unit of risk. If you would invest 66,500 in Groenlandsbanken AS on August 29, 2024 and sell it today you would earn a total of 2,500 from holding Groenlandsbanken AS or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Groenlandsbanken AS vs. Nordea Bank Abp
Performance |
| Timeline |
| Groenlandsbanken |
| Nordea Bank Abp |
Groenlandsbanken and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groenlandsbanken and Nordea Bank
The main advantage of trading using opposite Groenlandsbanken and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groenlandsbanken 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.| Groenlandsbanken vs. Sydbank AS | Groenlandsbanken vs. Jyske Bank AS | Groenlandsbanken vs. Alm Brand | Groenlandsbanken vs. Nordea Bank Abp |
| Nordea Bank vs. Jyske Bank AS | Nordea Bank vs. Tryg AS | Nordea Bank vs. Danske Bank AS | Nordea Bank vs. ISS AS |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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