Correlation Between Nordea Bank and Svenska Handelsbanken
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Svenska Handelsbanken 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 Svenska Handelsbanken 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 Svenska Handelsbanken AB, you can compare the effects of market volatilities on Nordea Bank and Svenska Handelsbanken 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 Svenska Handelsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Svenska Handelsbanken.
Diversification Opportunities for Nordea Bank and Svenska Handelsbanken
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nordea and Svenska is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Svenska Handelsbanken AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Handelsbanken 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 Svenska Handelsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Handelsbanken has no effect on the direction of Nordea Bank i.e., Nordea Bank and Svenska Handelsbanken go up and down completely randomly.
Pair Corralation between Nordea Bank and Svenska Handelsbanken
Assuming the 90 days trading horizon Nordea Bank is expected to generate 1.07 times less return on investment than Svenska Handelsbanken. In addition to that, Nordea Bank is 1.25 times more volatile than Svenska Handelsbanken AB. It trades about 0.52 of its total potential returns per unit of risk. Svenska Handelsbanken AB is currently generating about 0.69 per unit of volatility. If you would invest 14,650 in Svenska Handelsbanken AB on October 23, 2024 and sell it today you would earn a total of 1,390 from holding Svenska Handelsbanken AB or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Svenska Handelsbanken AB
Performance |
| Timeline |
| Nordea Bank Abp |
| Svenska Handelsbanken |
Nordea Bank and Svenska Handelsbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Svenska Handelsbanken
The main advantage of trading using opposite Nordea Bank and Svenska Handelsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Svenska Handelsbanken 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 Svenska Handelsbanken will offset losses from the drop in Svenska Handelsbanken's long position.| Nordea Bank vs. Systemair AB | Nordea Bank vs. Scandic Hotels Group | Nordea Bank vs. FormPipe Software AB | Nordea Bank vs. G5 Entertainment publ |
| Svenska Handelsbanken vs. Svenska Handelsbanken AB | Svenska Handelsbanken vs. Nordea Bank Abp | Svenska Handelsbanken vs. Atlas Copco AB | Svenska Handelsbanken vs. Skandinaviska Enskilda Banken |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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