Correlation Between Investor and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both Investor 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 Investor and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB ser and Nordea Bank Abp, you can compare the effects of market volatilities on Investor 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 Investor with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Nordea Bank.
Diversification Opportunities for Investor and Nordea Bank
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Investor and Nordea is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser 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 Investor 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 Investor AB ser 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 Investor i.e., Investor and Nordea Bank go up and down completely randomly.
Pair Corralation between Investor and Nordea Bank
Assuming the 90 days trading horizon Investor AB ser is expected to under-perform the Nordea Bank. But the stock apears to be less risky and, when comparing its historical volatility, Investor AB ser is 1.17 times less risky than Nordea Bank. The stock trades about -0.24 of its potential returns per unit of risk. The Nordea Bank Abp is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 12,590 in Nordea Bank Abp on August 29, 2024 and sell it today you would lose (410.00) from holding Nordea Bank Abp or give up 3.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investor AB ser vs. Nordea Bank Abp
Performance |
| Timeline |
| Investor AB ser |
| Nordea Bank Abp |
Investor and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and Nordea Bank
The main advantage of trading using opposite Investor and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor 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.| Investor vs. Norva24 Group AB | Investor vs. KABE Group AB | Investor vs. IAR Systems Group | Investor vs. Clinical Laserthermia Systems |
| Nordea Bank vs. Vitec Software Group | Nordea Bank vs. FormPipe Software AB | Nordea Bank vs. White Pearl Technology | 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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