Correlation Between Nordea Bank and Peab AB
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Peab AB 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 Peab AB 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 Peab AB, you can compare the effects of market volatilities on Nordea Bank and Peab AB 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 Peab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Peab AB.
Diversification Opportunities for Nordea Bank and Peab AB
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nordea and Peab is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Peab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peab 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 Peab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peab AB has no effect on the direction of Nordea Bank i.e., Nordea Bank and Peab AB go up and down completely randomly.
Pair Corralation between Nordea Bank and Peab AB
Assuming the 90 days trading horizon Nordea Bank is expected to generate 1.81 times less return on investment than Peab AB. But when comparing it to its historical volatility, Nordea Bank Abp is 1.78 times less risky than Peab AB. It trades about 0.05 of its potential returns per unit of risk. Peab AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,222 in Peab AB on September 12, 2024 and sell it today you would earn a total of 2,958 from holding Peab AB or generate 56.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Peab AB
Performance |
| Timeline |
| Nordea Bank Abp |
| Peab AB |
Nordea Bank and Peab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Peab AB
The main advantage of trading using opposite Nordea Bank and Peab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Peab AB 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 Peab AB will offset losses from the drop in Peab AB's long position.| Nordea Bank vs. Skandinaviska Enskilda Banken | Nordea Bank vs. Skandinaviska Enskilda Banken | Nordea Bank vs. Swedbank AB | Nordea Bank vs. Avanza Bank Holding |
| Peab AB vs. Bravida Holding AB | Peab AB vs. Instalco Intressenter AB | Peab AB vs. NCC AB | Peab AB vs. Fasadgruppen 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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