Correlation Between Nordea Bank and Exel Composites
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Exel Composites 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 Exel Composites 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 Exel Composites Oyj, you can compare the effects of market volatilities on Nordea Bank and Exel Composites 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 Exel Composites. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Exel Composites.
Diversification Opportunities for Nordea Bank and Exel Composites
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordea and Exel is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Exel Composites Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exel Composites 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 Exel Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exel Composites Oyj has no effect on the direction of Nordea Bank i.e., Nordea Bank and Exel Composites go up and down completely randomly.
Pair Corralation between Nordea Bank and Exel Composites
Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.4 times more return on investment than Exel Composites. However, Nordea Bank Abp is 2.47 times less risky than Exel Composites. It trades about -0.13 of its potential returns per unit of risk. Exel Composites Oyj is currently generating about -0.51 per unit of risk. If you would invest 1,095 in Nordea Bank Abp on August 28, 2024 and sell it today you would lose (32.00) from holding Nordea Bank Abp or give up 2.92% 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. Exel Composites Oyj
Performance |
| Timeline |
| Nordea Bank Abp |
| Exel Composites Oyj |
Nordea Bank and Exel Composites Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Exel Composites
The main advantage of trading using opposite Nordea Bank and Exel Composites positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Exel Composites 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 Exel Composites will offset losses from the drop in Exel Composites' 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 |
| Exel Composites vs. Aktia Bank Abp | Exel Composites vs. Alandsbanken Abp B | Exel Composites vs. Alandsbanken Abp A | Exel Composites vs. Sampo Oyj A |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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