Correlation Between Nordea Bank and Nordfyns Bank
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Nordfyns 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 Nordfyns 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 Nordfyns Bank AS, you can compare the effects of market volatilities on Nordea Bank and Nordfyns 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 Nordfyns Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Nordfyns Bank.
Diversification Opportunities for Nordea Bank and Nordfyns Bank
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordea and Nordfyns is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Nordfyns Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordfyns Bank AS 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 Nordfyns Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordfyns Bank AS has no effect on the direction of Nordea Bank i.e., Nordea Bank and Nordfyns Bank go up and down completely randomly.
Pair Corralation between Nordea Bank and Nordfyns Bank
Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 1.76 times more return on investment than Nordfyns Bank. However, Nordea Bank is 1.76 times more volatile than Nordfyns Bank AS. It trades about 0.01 of its potential returns per unit of risk. Nordfyns Bank AS is currently generating about -0.5 per unit of risk. If you would invest 7,986 in Nordea Bank Abp on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Nordea Bank Abp or generate 0.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Nordfyns Bank AS
Performance |
| Timeline |
| Nordea Bank Abp |
| Nordfyns Bank AS |
Nordea Bank and Nordfyns Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Nordfyns Bank
The main advantage of trading using opposite Nordea Bank and Nordfyns Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Nordfyns 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 Nordfyns Bank will offset losses from the drop in Nordfyns 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 |
| Nordfyns Bank vs. Skjern Bank AS | Nordfyns Bank vs. Lollands Bank | Nordfyns Bank vs. Djurslands Bank | Nordfyns Bank vs. Moens 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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