Correlation Between Nordea Bank and Fundamental Invest
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Fundamental 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 Nordea Bank and Fundamental Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordea Bank Abp and Fundamental Invest Stock, you can compare the effects of market volatilities on Nordea Bank and Fundamental 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 Nordea Bank with a short position of Fundamental Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Fundamental Invest.
Diversification Opportunities for Nordea Bank and Fundamental Invest
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordea and Fundamental is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Fundamental Invest Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Invest Stock and Nordea 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 Nordea Bank Abp are associated (or correlated) with Fundamental Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Invest Stock has no effect on the direction of Nordea Bank i.e., Nordea Bank and Fundamental Invest go up and down completely randomly.
Pair Corralation between Nordea Bank and Fundamental Invest
Assuming the 90 days trading horizon Nordea Bank Abp is expected to under-perform the Fundamental Invest. In addition to that, Nordea Bank is 1.44 times more volatile than Fundamental Invest Stock. It trades about -0.02 of its total potential returns per unit of risk. Fundamental Invest Stock is currently generating about 0.0 per unit of volatility. If you would invest 19,727 in Fundamental Invest Stock on August 25, 2024 and sell it today you would lose (231.00) from holding Fundamental Invest Stock or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Fundamental Invest Stock
Performance |
| Timeline |
| Nordea Bank Abp |
| Fundamental Invest Stock |
Nordea Bank and Fundamental Invest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Fundamental Invest
The main advantage of trading using opposite Nordea Bank and Fundamental Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Fundamental 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 Fundamental Invest will offset losses from the drop in Fundamental Invest's long position.| Nordea Bank vs. Jyske Bank AS | Nordea Bank vs. Tryg AS | Nordea Bank vs. Danske Bank AS | Nordea Bank vs. ISS AS |
| Fundamental Invest vs. Novo Nordisk AS | Fundamental Invest vs. Nordea Bank Abp | Fundamental Invest vs. DSV Panalpina AS | Fundamental Invest vs. AP Mller |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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