Correlation Between North Media and Nordfyns Bank
Can any of the company-specific risk be diversified away by investing in both North Media and Nordfyns 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 North Media and Nordfyns Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Media AS and Nordfyns Bank AS, you can compare the effects of market volatilities on North Media and Nordfyns 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 North Media with a short position of Nordfyns Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Media and Nordfyns Bank.
Diversification Opportunities for North Media and Nordfyns Bank
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between North and Nordfyns is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding North Media AS and Nordfyns Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordfyns Bank AS and North Media 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 North Media AS are associated (or correlated) with Nordfyns Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordfyns Bank AS has no effect on the direction of North Media i.e., North Media and Nordfyns Bank go up and down completely randomly.
Pair Corralation between North Media and Nordfyns Bank
Assuming the 90 days trading horizon North Media AS is expected to under-perform the Nordfyns Bank. In addition to that, North Media is 1.88 times more volatile than Nordfyns Bank AS. It trades about -0.29 of its total potential returns per unit of risk. Nordfyns Bank AS is currently generating about -0.39 per unit of volatility. If you would invest 33,800 in Nordfyns Bank AS on August 30, 2024 and sell it today you would lose (2,000) from holding Nordfyns Bank AS or give up 5.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Media AS vs. Nordfyns Bank AS
Performance |
| Timeline |
| North Media AS |
| Nordfyns Bank AS |
North Media and Nordfyns Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Media and Nordfyns Bank
The main advantage of trading using opposite North Media and Nordfyns Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Media position performs unexpectedly, Nordfyns 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 Nordfyns Bank will offset losses from the drop in Nordfyns Bank's long position.| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group AS |
| Nordfyns Bank vs. Sydbank AS | Nordfyns Bank vs. Jyske Bank AS | Nordfyns Bank vs. Alm Brand | Nordfyns Bank vs. Nordea Bank Abp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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