Correlation Between Nordic Iron and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both Nordic Iron and Nordea Bank 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 Nordic Iron and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Iron Ore and Nordea Bank Abp, you can compare the effects of market volatilities on Nordic Iron and Nordea Bank 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 Nordic Iron with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Iron and Nordea Bank.
Diversification Opportunities for Nordic Iron and Nordea Bank
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nordic and Nordea is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Iron Ore and Nordea Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Bank Abp and Nordic Iron 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 Nordic Iron Ore are associated (or correlated) with Nordea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Bank Abp has no effect on the direction of Nordic Iron i.e., Nordic Iron and Nordea Bank go up and down completely randomly.
Pair Corralation between Nordic Iron and Nordea Bank
Assuming the 90 days trading horizon Nordic Iron Ore is expected to generate 3.52 times more return on investment than Nordea Bank. However, Nordic Iron is 3.52 times more volatile than Nordea Bank Abp. It trades about 0.05 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about -0.05 per unit of risk. If you would invest 486.00 in Nordic Iron Ore on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Nordic Iron Ore or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Iron Ore vs. Nordea Bank Abp
Performance |
| Timeline |
| Nordic Iron Ore |
| Nordea Bank Abp |
Nordic Iron and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Iron and Nordea Bank
The main advantage of trading using opposite Nordic Iron and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Iron position performs unexpectedly, Nordea Bank 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 Nordea Bank will offset losses from the drop in Nordea Bank's long position.| Nordic Iron vs. Leading Edge Materials | Nordic Iron vs. Alzinova AB | Nordic Iron vs. SaltX Technology Holding | Nordic Iron vs. KABE Group AB |
| Nordea Bank vs. High Coast Distillery | Nordea Bank vs. Viva Wine Group | Nordea Bank vs. Lohilo Foods AB | Nordea Bank vs. Fractal Gaming Group |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |