Correlation Between Nordea Bank and Skandinaviska Enskilda
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Skandinaviska Enskilda 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 Skandinaviska Enskilda 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 Skandinaviska Enskilda Banken, you can compare the effects of market volatilities on Nordea Bank and Skandinaviska Enskilda 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 Skandinaviska Enskilda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Skandinaviska Enskilda.
Diversification Opportunities for Nordea Bank and Skandinaviska Enskilda
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordea and Skandinaviska is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Skandinaviska Enskilda Banken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skandinaviska Enskilda 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 Skandinaviska Enskilda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skandinaviska Enskilda has no effect on the direction of Nordea Bank i.e., Nordea Bank and Skandinaviska Enskilda go up and down completely randomly.
Pair Corralation between Nordea Bank and Skandinaviska Enskilda
Assuming the 90 days trading horizon Nordea Bank is expected to generate 1.43 times less return on investment than Skandinaviska Enskilda. But when comparing it to its historical volatility, Nordea Bank Abp is 1.21 times less risky than Skandinaviska Enskilda. It trades about 0.04 of its potential returns per unit of risk. Skandinaviska Enskilda Banken is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12,843 in Skandinaviska Enskilda Banken on August 26, 2024 and sell it today you would earn a total of 2,417 from holding Skandinaviska Enskilda Banken or generate 18.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Skandinaviska Enskilda Banken
Performance |
| Timeline |
| Nordea Bank Abp |
| Skandinaviska Enskilda |
Nordea Bank and Skandinaviska Enskilda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Skandinaviska Enskilda
The main advantage of trading using opposite Nordea Bank and Skandinaviska Enskilda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Skandinaviska Enskilda 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 Skandinaviska Enskilda will offset losses from the drop in Skandinaviska Enskilda'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 |
| Skandinaviska Enskilda vs. Skandinaviska Enskilda Banken | Skandinaviska Enskilda vs. Swedbank AB | Skandinaviska Enskilda vs. TF Bank 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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