Correlation Between Nordea Bank and Groenlandsbanken
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Groenlandsbanken 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 Groenlandsbanken 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 Groenlandsbanken AS, you can compare the effects of market volatilities on Nordea Bank and Groenlandsbanken 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 Groenlandsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Groenlandsbanken.
Diversification Opportunities for Nordea Bank and Groenlandsbanken
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nordea and Groenlandsbanken is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Groenlandsbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groenlandsbanken 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 Groenlandsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groenlandsbanken has no effect on the direction of Nordea Bank i.e., Nordea Bank and Groenlandsbanken go up and down completely randomly.
Pair Corralation between Nordea Bank and Groenlandsbanken
Assuming the 90 days trading horizon Nordea Bank Abp is expected to under-perform the Groenlandsbanken. In addition to that, Nordea Bank is 1.75 times more volatile than Groenlandsbanken AS. It trades about -0.13 of its total potential returns per unit of risk. Groenlandsbanken AS is currently generating about 0.27 per unit of volatility. If you would invest 66,500 in Groenlandsbanken AS on August 29, 2024 and sell it today you would earn a total of 2,500 from holding Groenlandsbanken AS or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nordea Bank Abp vs. Groenlandsbanken AS
Performance |
| Timeline |
| Nordea Bank Abp |
| Groenlandsbanken |
Nordea Bank and Groenlandsbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Groenlandsbanken
The main advantage of trading using opposite Nordea Bank and Groenlandsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Groenlandsbanken 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 Groenlandsbanken will offset losses from the drop in Groenlandsbanken'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 |
| Groenlandsbanken vs. Sydbank AS | Groenlandsbanken vs. Jyske Bank AS | Groenlandsbanken vs. Alm Brand | Groenlandsbanken vs. Nordea Bank Abp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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