Correlation Between Nordea Bank and Alandsbanken Abp
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Alandsbanken Abp 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 Alandsbanken Abp 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 Alandsbanken Abp A, you can compare the effects of market volatilities on Nordea Bank and Alandsbanken Abp 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 Alandsbanken Abp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Alandsbanken Abp.
Diversification Opportunities for Nordea Bank and Alandsbanken Abp
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nordea and Alandsbanken is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Alandsbanken Abp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alandsbanken Abp A 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 Alandsbanken Abp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alandsbanken Abp A has no effect on the direction of Nordea Bank i.e., Nordea Bank and Alandsbanken Abp go up and down completely randomly.
Pair Corralation between Nordea Bank and Alandsbanken Abp
Assuming the 90 days trading horizon Nordea Bank is expected to generate 4.65 times less return on investment than Alandsbanken Abp. But when comparing it to its historical volatility, Nordea Bank Abp is 1.31 times less risky than Alandsbanken Abp. It trades about 0.01 of its potential returns per unit of risk. Alandsbanken Abp A is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,053 in Alandsbanken Abp A on August 28, 2024 and sell it today you would earn a total of 347.00 from holding Alandsbanken Abp A or generate 11.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Nordea Bank Abp vs. Alandsbanken Abp A
Performance |
| Timeline |
| Nordea Bank Abp |
| Alandsbanken Abp A |
Nordea Bank and Alandsbanken Abp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Alandsbanken Abp
The main advantage of trading using opposite Nordea Bank and Alandsbanken Abp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Alandsbanken Abp 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 Alandsbanken Abp will offset losses from the drop in Alandsbanken Abp's long position.| Nordea Bank vs. Sampo Oyj A | Nordea Bank vs. Fortum Oyj | Nordea Bank vs. UPM Kymmene Oyj | Nordea Bank vs. Neste Oil Oyj |
| Alandsbanken Abp vs. Aktia Bank Abp | Alandsbanken Abp vs. Alandsbanken Abp B | Alandsbanken Abp vs. CapMan Oyj B | Alandsbanken Abp vs. Tokmanni Group Oyj |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |