Correlation Between Nordea Bank and Nedbank
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Nedbank 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 Nedbank 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 Nedbank Group, you can compare the effects of market volatilities on Nordea Bank and Nedbank 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 Nedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Nedbank.
Diversification Opportunities for Nordea Bank and Nedbank
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nordea and Nedbank is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Nedbank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nedbank Group 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 Nedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nedbank Group has no effect on the direction of Nordea Bank i.e., Nordea Bank and Nedbank go up and down completely randomly.
Pair Corralation between Nordea Bank and Nedbank
Assuming the 90 days horizon Nordea Bank Abp is expected to generate 0.55 times more return on investment than Nedbank. However, Nordea Bank Abp is 1.82 times less risky than Nedbank. It trades about 0.48 of its potential returns per unit of risk. Nedbank Group is currently generating about 0.04 per unit of risk. If you would invest 1,094 in Nordea Bank Abp on November 2, 2024 and sell it today you would earn a total of 124.00 from holding Nordea Bank Abp or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Nedbank Group
Performance |
| Timeline |
| Nordea Bank Abp |
| Nedbank Group |
Nordea Bank and Nedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Nedbank
The main advantage of trading using opposite Nordea Bank and Nedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Nedbank 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 Nedbank will offset losses from the drop in Nedbank's long position.| Nordea Bank vs. United Overseas Bank | Nordea Bank vs. KBC Groep NV | Nordea Bank vs. Bank Mandiri Persero | Nordea Bank vs. Overseas Chinese Banking |
| Nedbank vs. Standard Bank Group | Nedbank vs. Sanlam Ltd PK | Nedbank vs. Absa Group Ltd | Nedbank vs. Bank Mandiri Persero |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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