Correlation Between H M and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both H M 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 M 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 M Hennes and Nordea Bank Abp, you can compare the effects of market volatilities on H M 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 M with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and Nordea Bank.
Diversification Opportunities for H M and Nordea Bank
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HM-B and Nordea is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes 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 M 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 M Hennes 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 M i.e., H M and Nordea Bank go up and down completely randomly.
Pair Corralation between H M and Nordea Bank
Assuming the 90 days trading horizon H M Hennes is expected to generate 1.83 times more return on investment than Nordea Bank. However, H M is 1.83 times more volatile than Nordea Bank Abp. It trades about 0.04 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about 0.06 per unit of risk. If you would invest 10,639 in H M Hennes on September 2, 2024 and sell it today you would earn a total of 4,486 from holding H M Hennes or generate 42.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H M Hennes vs. Nordea Bank Abp
Performance |
| Timeline |
| H M Hennes |
| Nordea Bank Abp |
H M and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H M and Nordea Bank
The main advantage of trading using opposite H M and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H M 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 H M Hennes 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. Vitec Software Group | Nordea Bank vs. Viaplay Group AB | Nordea Bank vs. Arion banki hf | Nordea Bank vs. Soder Sportfiske AB |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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