Correlation Between Nordea Bank and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Vestas Wind 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 Vestas Wind 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 Vestas Wind Systems, you can compare the effects of market volatilities on Nordea Bank and Vestas Wind 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 Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Vestas Wind.
Diversification Opportunities for Nordea Bank and Vestas Wind
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordea and Vestas is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems 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 Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of Nordea Bank i.e., Nordea Bank and Vestas Wind go up and down completely randomly.
Pair Corralation between Nordea Bank and Vestas Wind
Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.27 times more return on investment than Vestas Wind. However, Nordea Bank Abp is 3.73 times less risky than Vestas Wind. It trades about -0.09 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.23 per unit of risk. If you would invest 8,124 in Nordea Bank Abp on August 24, 2024 and sell it today you would lose (208.00) from holding Nordea Bank Abp or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Vestas Wind Systems
Performance |
| Timeline |
| Nordea Bank Abp |
| Vestas Wind Systems |
Nordea Bank and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Vestas Wind
The main advantage of trading using opposite Nordea Bank and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Vestas Wind 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 Vestas Wind will offset losses from the drop in Vestas Wind'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 |
| Vestas Wind vs. Orsted AS | Vestas Wind vs. Danske Bank AS | Vestas Wind vs. Bavarian Nordic | Vestas Wind vs. DSV Panalpina 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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