Correlation Between Nightingale Health and Alandsbanken Abp
Can any of the company-specific risk be diversified away by investing in both Nightingale Health and Alandsbanken Abp 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 Nightingale Health and Alandsbanken Abp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nightingale Health Oyj and Alandsbanken Abp A, you can compare the effects of market volatilities on Nightingale Health and Alandsbanken Abp 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 Nightingale Health with a short position of Alandsbanken Abp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nightingale Health and Alandsbanken Abp.
Diversification Opportunities for Nightingale Health and Alandsbanken Abp
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nightingale and Alandsbanken is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nightingale Health Oyj and Alandsbanken Abp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alandsbanken Abp A and Nightingale Health 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 Nightingale Health Oyj are associated (or correlated) with Alandsbanken Abp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alandsbanken Abp A has no effect on the direction of Nightingale Health i.e., Nightingale Health and Alandsbanken Abp go up and down completely randomly.
Pair Corralation between Nightingale Health and Alandsbanken Abp
Assuming the 90 days trading horizon Nightingale Health Oyj is expected to generate 2.96 times more return on investment than Alandsbanken Abp. However, Nightingale Health is 2.96 times more volatile than Alandsbanken Abp A. It trades about 0.1 of its potential returns per unit of risk. Alandsbanken Abp A is currently generating about 0.05 per unit of risk. If you would invest 116.00 in Nightingale Health Oyj on August 26, 2024 and sell it today you would earn a total of 160.00 from holding Nightingale Health Oyj or generate 137.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nightingale Health Oyj vs. Alandsbanken Abp A
Performance |
| Timeline |
| Nightingale Health Oyj |
| Alandsbanken Abp A |
Nightingale Health and Alandsbanken Abp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nightingale Health and Alandsbanken Abp
The main advantage of trading using opposite Nightingale Health and Alandsbanken Abp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nightingale Health position performs unexpectedly, Alandsbanken Abp 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 Alandsbanken Abp will offset losses from the drop in Alandsbanken Abp's long position.| Nightingale Health vs. Vaisala Oyj A | Nightingale Health vs. CapMan Oyj B | Nightingale Health vs. HKFoods Oyj A | Nightingale Health vs. KONE Oyj |
| Alandsbanken Abp vs. Sampo Oyj A | Alandsbanken Abp vs. Tokmanni Group Oyj | Alandsbanken Abp vs. Nordea Bank Abp | Alandsbanken Abp vs. TietoEVRY Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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