Correlation Between Nordea Bank and Swedbank
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Swedbank 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 Swedbank 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 Swedbank AB, you can compare the effects of market volatilities on Nordea Bank and Swedbank 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 Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Swedbank.
Diversification Opportunities for Nordea Bank and Swedbank
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nordea and Swedbank is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank 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 Swedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank AB has no effect on the direction of Nordea Bank i.e., Nordea Bank and Swedbank go up and down completely randomly.
Pair Corralation between Nordea Bank and Swedbank
Assuming the 90 days horizon Nordea Bank is expected to generate 1.98 times less return on investment than Swedbank. But when comparing it to its historical volatility, Nordea Bank Abp is 1.2 times less risky than Swedbank. It trades about 0.03 of its potential returns per unit of risk. Swedbank AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,433 in Swedbank AB on August 26, 2024 and sell it today you would earn a total of 508.00 from holding Swedbank AB or generate 35.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nordea Bank Abp vs. Swedbank AB
Performance |
| Timeline |
| Nordea Bank Abp |
| Swedbank AB |
Nordea Bank and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Swedbank
The main advantage of trading using opposite Nordea Bank and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Swedbank 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 Swedbank will offset losses from the drop in Swedbank'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 |
| Swedbank vs. United Overseas Bank | Swedbank vs. KBC Groep NV | Swedbank vs. Jyske Bank AS | Swedbank vs. Israel Discount Bank |
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 Stocks Directory module to find actively traded stocks across global markets.
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