Correlation Between Nordea Bank and Novonesis
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Novonesis 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 Novonesis 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 Novonesis AS, you can compare the effects of market volatilities on Nordea Bank and Novonesis 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 Novonesis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Novonesis.
Diversification Opportunities for Nordea Bank and Novonesis
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordea and Novonesis is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Novonesis AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonesis 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 Novonesis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novonesis AS has no effect on the direction of Nordea Bank i.e., Nordea Bank and Novonesis go up and down completely randomly.
Pair Corralation between Nordea Bank and Novonesis
Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.91 times more return on investment than Novonesis. However, Nordea Bank Abp is 1.09 times less risky than Novonesis. It trades about 0.12 of its potential returns per unit of risk. Novonesis AS is currently generating about -0.08 per unit of risk. If you would invest 7,960 in Nordea Bank Abp on November 28, 2024 and sell it today you would earn a total of 1,460 from holding Nordea Bank Abp or generate 18.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Nordea Bank Abp vs. Novonesis AS
Performance |
| Timeline |
| Nordea Bank Abp |
| Novonesis AS |
Nordea Bank and Novonesis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Novonesis
The main advantage of trading using opposite Nordea Bank and Novonesis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Novonesis 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 Novonesis will offset losses from the drop in Novonesis' long position.| Nordea Bank vs. Jyske Bank AS | Nordea Bank vs. Tryg AS | Nordea Bank vs. Danske Bank AS | Nordea Bank vs. ISS AS |
| Novonesis vs. Skjern Bank AS | Novonesis vs. Jyske Bank AS | Novonesis vs. Ringkjoebing Landbobank AS | Novonesis vs. Hvidbjerg Bank |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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