Correlation Between Nordea Bank and SKAKO AS
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and SKAKO AS 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 SKAKO AS 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 SKAKO AS, you can compare the effects of market volatilities on Nordea Bank and SKAKO AS 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 SKAKO AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and SKAKO AS.
Diversification Opportunities for Nordea Bank and SKAKO AS
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nordea and SKAKO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and SKAKO AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKAKO 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 SKAKO AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKAKO AS has no effect on the direction of Nordea Bank i.e., Nordea Bank and SKAKO AS go up and down completely randomly.
Pair Corralation between Nordea Bank and SKAKO AS
Assuming the 90 days trading horizon Nordea Bank is expected to generate 2.05 times less return on investment than SKAKO AS. But when comparing it to its historical volatility, Nordea Bank Abp is 1.8 times less risky than SKAKO AS. It trades about 0.03 of its potential returns per unit of risk. SKAKO AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,153 in SKAKO AS on November 5, 2024 and sell it today you would earn a total of 1,207 from holding SKAKO AS or generate 16.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Nordea Bank Abp vs. SKAKO AS
Performance |
| Timeline |
| Nordea Bank Abp |
| SKAKO AS |
Nordea Bank and SKAKO AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and SKAKO AS
The main advantage of trading using opposite Nordea Bank and SKAKO AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, SKAKO AS 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 SKAKO AS will offset losses from the drop in SKAKO AS'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 |
| SKAKO AS vs. North Media AS | SKAKO AS vs. HH International AS | SKAKO AS vs. Per Aarsleff Holding | SKAKO AS vs. First Farms 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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