Correlation Between Nordea Bank and Dovre Group
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Dovre Group 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 Dovre Group 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 Dovre Group Plc, you can compare the effects of market volatilities on Nordea Bank and Dovre Group 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 Dovre Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Dovre Group.
Diversification Opportunities for Nordea Bank and Dovre Group
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nordea and Dovre is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Dovre Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dovre Group Plc 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 Dovre Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dovre Group Plc has no effect on the direction of Nordea Bank i.e., Nordea Bank and Dovre Group go up and down completely randomly.
Pair Corralation between Nordea Bank and Dovre Group
Assuming the 90 days trading horizon Nordea Bank is expected to generate 74.45 times less return on investment than Dovre Group. But when comparing it to its historical volatility, Nordea Bank Abp is 1.91 times less risky than Dovre Group. It trades about 0.01 of its potential returns per unit of risk. Dovre Group Plc is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Dovre Group Plc on September 13, 2024 and sell it today you would earn a total of 5.00 from holding Dovre Group Plc or generate 16.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nordea Bank Abp vs. Dovre Group Plc
Performance |
| Timeline |
| Nordea Bank Abp |
| Dovre Group Plc |
Nordea Bank and Dovre Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Dovre Group
The main advantage of trading using opposite Nordea Bank and Dovre Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Dovre Group 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 Dovre Group will offset losses from the drop in Dovre Group'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 |
| Dovre Group vs. Telefonaktiebolaget LM Ericsson | Dovre Group vs. KONE Oyj | Dovre Group vs. Nordea Bank Abp | Dovre Group vs. TietoEVRY Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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