Correlation Between Nordea Bank and Pinnacle Bancshares
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Pinnacle Bancshares 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 Pinnacle Bancshares 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 Pinnacle Bancshares, you can compare the effects of market volatilities on Nordea Bank and Pinnacle Bancshares 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 Pinnacle Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Pinnacle Bancshares.
Diversification Opportunities for Nordea Bank and Pinnacle Bancshares
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nordea and Pinnacle is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Pinnacle Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Bancshares 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 Pinnacle Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Bancshares has no effect on the direction of Nordea Bank i.e., Nordea Bank and Pinnacle Bancshares go up and down completely randomly.
Pair Corralation between Nordea Bank and Pinnacle Bancshares
If you would invest 1,112 in Nordea Bank Abp on November 2, 2024 and sell it today you would earn a total of 106.00 from holding Nordea Bank Abp or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.2% |
| Values | Daily Returns |
Nordea Bank Abp vs. Pinnacle Bancshares
Performance |
| Timeline |
| Nordea Bank Abp |
| Pinnacle Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nordea Bank and Pinnacle Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Pinnacle Bancshares
The main advantage of trading using opposite Nordea Bank and Pinnacle Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Pinnacle Bancshares 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 Pinnacle Bancshares will offset losses from the drop in Pinnacle Bancshares' 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 |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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