Correlation Between Hvidbjerg Bank and Nordea Invest

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Can any of the company-specific risk be diversified away by investing in both Hvidbjerg Bank and Nordea Invest 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 Hvidbjerg Bank and Nordea Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hvidbjerg Bank and Nordea Invest Basis, you can compare the effects of market volatilities on Hvidbjerg Bank and Nordea Invest 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 Hvidbjerg Bank with a short position of Nordea Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hvidbjerg Bank and Nordea Invest.

Diversification Opportunities for Hvidbjerg Bank and Nordea Invest

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Hvidbjerg and Nordea is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hvidbjerg Bank and Nordea Invest Basis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Invest Basis and Hvidbjerg Bank 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 Hvidbjerg Bank are associated (or correlated) with Nordea Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Invest Basis has no effect on the direction of Hvidbjerg Bank i.e., Hvidbjerg Bank and Nordea Invest go up and down completely randomly.

Pair Corralation between Hvidbjerg Bank and Nordea Invest

Assuming the 90 days trading horizon Hvidbjerg Bank is expected to generate 1.25 times more return on investment than Nordea Invest. However, Hvidbjerg Bank is 1.25 times more volatile than Nordea Invest Basis. It trades about 0.06 of its potential returns per unit of risk. Nordea Invest Basis is currently generating about -0.2 per unit of risk. If you would invest  11,200  in Hvidbjerg Bank on December 11, 2024 and sell it today you would earn a total of  2,200  from holding Hvidbjerg Bank or generate 19.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy17.23%
ValuesDaily Returns

Hvidbjerg Bank  vs.  Nordea Invest Basis

 Performance 
       Timeline  
Hvidbjerg Bank 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Hvidbjerg Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hvidbjerg Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.
Nordea Invest Basis 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Nordea Invest Basis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hvidbjerg Bank and Nordea Invest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hvidbjerg Bank and Nordea Invest

The main advantage of trading using opposite Hvidbjerg Bank and Nordea Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hvidbjerg Bank position performs unexpectedly, Nordea Invest 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 Invest will offset losses from the drop in Nordea Invest's long position.
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The idea behind Hvidbjerg Bank and Nordea Invest Basis 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.
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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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