Correlation Between Nordea Bank and Hvidbjerg Bank
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Hvidbjerg 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 Nordea Bank and Hvidbjerg Bank 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 Hvidbjerg Bank, you can compare the effects of market volatilities on Nordea Bank and Hvidbjerg 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 Nordea Bank with a short position of Hvidbjerg Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Hvidbjerg Bank.
Diversification Opportunities for Nordea Bank and Hvidbjerg Bank
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nordea and Hvidbjerg is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Hvidbjerg Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hvidbjerg Bank 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 Hvidbjerg Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hvidbjerg Bank has no effect on the direction of Nordea Bank i.e., Nordea Bank and Hvidbjerg Bank go up and down completely randomly.
Pair Corralation between Nordea Bank and Hvidbjerg Bank
Assuming the 90 days trading horizon Nordea Bank is expected to generate 26.89 times less return on investment than Hvidbjerg Bank. But when comparing it to its historical volatility, Nordea Bank Abp is 1.07 times less risky than Hvidbjerg Bank. It trades about 0.01 of its potential returns per unit of risk. Hvidbjerg Bank is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 11,300 in Hvidbjerg Bank on September 1, 2024 and sell it today you would earn a total of 500.00 from holding Hvidbjerg Bank or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Hvidbjerg Bank
Performance |
| Timeline |
| Nordea Bank Abp |
| Hvidbjerg Bank |
Nordea Bank and Hvidbjerg Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Hvidbjerg Bank
The main advantage of trading using opposite Nordea Bank and Hvidbjerg Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Hvidbjerg 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 Hvidbjerg Bank will offset losses from the drop in Hvidbjerg Bank'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 |
| Hvidbjerg Bank vs. Skjern Bank AS | Hvidbjerg Bank vs. Lollands Bank | Hvidbjerg Bank vs. Djurslands Bank | Hvidbjerg Bank vs. Nordfyns 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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