Correlation Between Nordea Bank and Etteplan Oyj
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Etteplan Oyj 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 Etteplan Oyj 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 Etteplan Oyj, you can compare the effects of market volatilities on Nordea Bank and Etteplan Oyj 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 Etteplan Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Etteplan Oyj.
Diversification Opportunities for Nordea Bank and Etteplan Oyj
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nordea and Etteplan is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Etteplan Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etteplan Oyj 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 Etteplan Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etteplan Oyj has no effect on the direction of Nordea Bank i.e., Nordea Bank and Etteplan Oyj go up and down completely randomly.
Pair Corralation between Nordea Bank and Etteplan Oyj
Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.85 times more return on investment than Etteplan Oyj. However, Nordea Bank Abp is 1.18 times less risky than Etteplan Oyj. It trades about 0.33 of its potential returns per unit of risk. Etteplan Oyj is currently generating about 0.08 per unit of risk. If you would invest 1,163 in Nordea Bank Abp on November 28, 2024 and sell it today you would earn a total of 99.00 from holding Nordea Bank Abp or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nordea Bank Abp vs. Etteplan Oyj
Performance |
| Timeline |
| Nordea Bank Abp |
| Etteplan Oyj |
Nordea Bank and Etteplan Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Etteplan Oyj
The main advantage of trading using opposite Nordea Bank and Etteplan Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Etteplan Oyj 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 Etteplan Oyj will offset losses from the drop in Etteplan Oyj'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 |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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