Correlation Between Nordea Bank and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Atlas Copco 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 Atlas Copco 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 Atlas Copco AB, you can compare the effects of market volatilities on Nordea Bank and Atlas Copco 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 Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Atlas Copco.
Diversification Opportunities for Nordea Bank and Atlas Copco
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordea and Atlas is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB 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 Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of Nordea Bank i.e., Nordea Bank and Atlas Copco go up and down completely randomly.
Pair Corralation between Nordea Bank and Atlas Copco
Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.86 times more return on investment than Atlas Copco. However, Nordea Bank Abp is 1.17 times less risky than Atlas Copco. It trades about 0.03 of its potential returns per unit of risk. Atlas Copco AB is currently generating about -0.05 per unit of risk. If you would invest 12,040 in Nordea Bank Abp on August 25, 2024 and sell it today you would earn a total of 190.00 from holding Nordea Bank Abp or generate 1.58% 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. Atlas Copco AB
Performance |
| Timeline |
| Nordea Bank Abp |
| Atlas Copco AB |
Nordea Bank and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Atlas Copco
The main advantage of trading using opposite Nordea Bank and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.| Nordea Bank vs. Skandinaviska Enskilda Banken | Nordea Bank vs. Skandinaviska Enskilda Banken | Nordea Bank vs. Swedbank AB | Nordea Bank vs. TF Bank AB |
| Atlas Copco vs. Sandvik AB | Atlas Copco vs. AB SKF | Atlas Copco vs. Alfa Laval AB | Atlas Copco vs. ASSA ABLOY 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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