Correlation Between HP and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both HP 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 HP and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Nordea Bank Abp, you can compare the effects of market volatilities on HP 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 HP with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Nordea Bank.
Diversification Opportunities for HP and Nordea Bank
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HP and Nordea is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc 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 HP 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 HP Inc 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 HP i.e., HP and Nordea Bank go up and down completely randomly.
Pair Corralation between HP and Nordea Bank
Considering the 90-day investment horizon HP Inc is expected to generate 2.52 times more return on investment than Nordea Bank. However, HP is 2.52 times more volatile than Nordea Bank Abp. It trades about -0.09 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about -0.22 per unit of risk. If you would invest 3,706 in HP Inc on August 30, 2024 and sell it today you would lose (240.00) from holding HP Inc or give up 6.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Nordea Bank Abp
Performance |
| Timeline |
| HP Inc |
| Nordea Bank Abp |
HP and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Nordea Bank
The main advantage of trading using opposite HP and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP 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 HP Inc 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. Israel Discount Bank | Nordea Bank vs. Baraboo Bancorporation | Nordea Bank vs. Danske Bank AS | Nordea Bank vs. Jyske Bank 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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