Correlation Between H Lundbeck and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both H Lundbeck 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 H Lundbeck and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H Lundbeck AS and Nordea Bank Abp, you can compare the effects of market volatilities on H Lundbeck 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 H Lundbeck with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of H Lundbeck and Nordea Bank.
Diversification Opportunities for H Lundbeck and Nordea Bank
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between HLUN-B and Nordea is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding H Lundbeck 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 H Lundbeck 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 H Lundbeck 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 H Lundbeck i.e., H Lundbeck and Nordea Bank go up and down completely randomly.
Pair Corralation between H Lundbeck and Nordea Bank
Assuming the 90 days trading horizon H Lundbeck AS is expected to generate 1.47 times more return on investment than Nordea Bank. However, H Lundbeck is 1.47 times more volatile than Nordea Bank Abp. It trades about 0.06 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about -0.08 per unit of risk. If you would invest 4,436 in H Lundbeck AS on August 25, 2024 and sell it today you would earn a total of 92.00 from holding H Lundbeck AS or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
H Lundbeck AS vs. Nordea Bank Abp
Performance |
| Timeline |
| H Lundbeck AS |
| Nordea Bank Abp |
H Lundbeck and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H Lundbeck and Nordea Bank
The main advantage of trading using opposite H Lundbeck and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H Lundbeck 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.| H Lundbeck vs. H Lundbeck AS | H Lundbeck vs. GN Store Nord | H Lundbeck vs. FLSmidth Co | H Lundbeck vs. ALK Abell AS |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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