Correlation Between Nordea Bank and Pharma Equity
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Pharma Equity 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 Pharma Equity 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 Pharma Equity Group, you can compare the effects of market volatilities on Nordea Bank and Pharma Equity 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 Pharma Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Pharma Equity.
Diversification Opportunities for Nordea Bank and Pharma Equity
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordea and Pharma is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Pharma Equity Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharma Equity Group 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 Pharma Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharma Equity Group has no effect on the direction of Nordea Bank i.e., Nordea Bank and Pharma Equity go up and down completely randomly.
Pair Corralation between Nordea Bank and Pharma Equity
Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.27 times more return on investment than Pharma Equity. However, Nordea Bank Abp is 3.71 times less risky than Pharma Equity. It trades about -0.03 of its potential returns per unit of risk. Pharma Equity Group is currently generating about -0.08 per unit of risk. If you would invest 8,470 in Nordea Bank Abp on September 3, 2024 and sell it today you would lose (482.00) from holding Nordea Bank Abp or give up 5.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Pharma Equity Group
Performance |
| Timeline |
| Nordea Bank Abp |
| Pharma Equity Group |
Nordea Bank and Pharma Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Pharma Equity
The main advantage of trading using opposite Nordea Bank and Pharma Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Pharma Equity 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 Pharma Equity will offset losses from the drop in Pharma Equity'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 |
| Pharma Equity vs. Novo Nordisk AS | Pharma Equity vs. Nordea Bank Abp | Pharma Equity vs. DSV Panalpina AS | Pharma Equity 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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