Correlation Between Nordea Bank and Tele2 AB
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Tele2 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 Tele2 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 Tele2 AB, you can compare the effects of market volatilities on Nordea Bank and Tele2 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 Tele2 AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Tele2 AB.
Diversification Opportunities for Nordea Bank and Tele2 AB
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordea and Tele2 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Tele2 AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tele2 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 Tele2 AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tele2 AB has no effect on the direction of Nordea Bank i.e., Nordea Bank and Tele2 AB go up and down completely randomly.
Pair Corralation between Nordea Bank and Tele2 AB
Assuming the 90 days trading horizon Nordea Bank Abp is expected to under-perform the Tele2 AB. In addition to that, Nordea Bank is 1.06 times more volatile than Tele2 AB. It trades about -0.04 of its total potential returns per unit of risk. Tele2 AB is currently generating about 0.07 per unit of volatility. If you would invest 11,075 in Tele2 AB on August 24, 2024 and sell it today you would earn a total of 150.00 from holding Tele2 AB or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nordea Bank Abp vs. Tele2 AB
Performance |
| Timeline |
| Nordea Bank Abp |
| Tele2 AB |
Nordea Bank and Tele2 AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Tele2 AB
The main advantage of trading using opposite Nordea Bank and Tele2 AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Tele2 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 Tele2 AB will offset losses from the drop in Tele2 AB's long position.| Nordea Bank vs. Skandinaviska Enskilda Banken | Nordea Bank vs. Skandinaviska Enskilda Banken | Nordea Bank vs. Swedbank AB | Nordea Bank vs. Arion banki hf |
| Tele2 AB vs. Telia Company AB | Tele2 AB vs. Skanska AB | Tele2 AB vs. AB Electrolux | Tele2 AB vs. Svenska Handelsbanken 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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