Correlation Between Nordea Bank and EEducation Albert
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and EEducation Albert 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 EEducation Albert 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 eEducation Albert AB, you can compare the effects of market volatilities on Nordea Bank and EEducation Albert 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 EEducation Albert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and EEducation Albert.
Diversification Opportunities for Nordea Bank and EEducation Albert
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordea and EEducation is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and eEducation Albert AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eEducation Albert 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 EEducation Albert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eEducation Albert has no effect on the direction of Nordea Bank i.e., Nordea Bank and EEducation Albert go up and down completely randomly.
Pair Corralation between Nordea Bank and EEducation Albert
Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.4 times more return on investment than EEducation Albert. However, Nordea Bank Abp is 2.5 times less risky than EEducation Albert. It trades about 0.05 of its potential returns per unit of risk. eEducation Albert AB is currently generating about -0.06 per unit of risk. If you would invest 10,756 in Nordea Bank Abp on August 26, 2024 and sell it today you would earn a total of 1,474 from holding Nordea Bank Abp or generate 13.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. eEducation Albert AB
Performance |
| Timeline |
| Nordea Bank Abp |
| eEducation Albert |
Nordea Bank and EEducation Albert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and EEducation Albert
The main advantage of trading using opposite Nordea Bank and EEducation Albert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, EEducation Albert 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 EEducation Albert will offset losses from the drop in EEducation Albert's long position.The idea behind Nordea Bank Abp and eEducation Albert AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| EEducation Albert vs. Sinch AB | EEducation Albert vs. Hexatronic Group AB | EEducation Albert vs. Samhllsbyggnadsbolaget i Norden | EEducation Albert vs. Storskogen Group AB |
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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