Correlation Between Nordea Bank and UniCredit SpA
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and UniCredit SpA 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 UniCredit SpA 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 UniCredit SpA ADR, you can compare the effects of market volatilities on Nordea Bank and UniCredit SpA 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 UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and UniCredit SpA.
Diversification Opportunities for Nordea Bank and UniCredit SpA
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nordea and UniCredit is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and UniCredit SpA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA ADR 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 UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA ADR has no effect on the direction of Nordea Bank i.e., Nordea Bank and UniCredit SpA go up and down completely randomly.
Pair Corralation between Nordea Bank and UniCredit SpA
Assuming the 90 days horizon Nordea Bank is expected to generate 7.28 times less return on investment than UniCredit SpA. But when comparing it to its historical volatility, Nordea Bank Abp is 1.43 times less risky than UniCredit SpA. It trades about 0.03 of its potential returns per unit of risk. UniCredit SpA ADR is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 575.00 in UniCredit SpA ADR on August 26, 2024 and sell it today you would earn a total of 1,523 from holding UniCredit SpA ADR or generate 264.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. UniCredit SpA ADR
Performance |
| Timeline |
| Nordea Bank Abp |
| UniCredit SpA ADR |
Nordea Bank and UniCredit SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and UniCredit SpA
The main advantage of trading using opposite Nordea Bank and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, UniCredit SpA 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 UniCredit SpA will offset losses from the drop in UniCredit SpA'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 |
| UniCredit SpA vs. Banco Do Brasil | UniCredit SpA vs. Societe Generale ADR | UniCredit SpA vs. BNP Paribas SA | UniCredit SpA vs. Credit Agricole SA |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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