Correlation Between Nordfyns Bank and Fundamental Invest
Can any of the company-specific risk be diversified away by investing in both Nordfyns Bank and Fundamental Invest 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 Nordfyns Bank and Fundamental Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordfyns Bank AS and Fundamental Invest Stock, you can compare the effects of market volatilities on Nordfyns Bank and Fundamental Invest 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 Nordfyns Bank with a short position of Fundamental Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordfyns Bank and Fundamental Invest.
Diversification Opportunities for Nordfyns Bank and Fundamental Invest
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nordfyns and Fundamental is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nordfyns Bank AS and Fundamental Invest Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Invest Stock and Nordfyns 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 Nordfyns Bank AS are associated (or correlated) with Fundamental Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Invest Stock has no effect on the direction of Nordfyns Bank i.e., Nordfyns Bank and Fundamental Invest go up and down completely randomly.
Pair Corralation between Nordfyns Bank and Fundamental Invest
Assuming the 90 days trading horizon Nordfyns Bank AS is expected to generate 1.04 times more return on investment than Fundamental Invest. However, Nordfyns Bank is 1.04 times more volatile than Fundamental Invest Stock. It trades about 0.06 of its potential returns per unit of risk. Fundamental Invest Stock is currently generating about 0.04 per unit of risk. If you would invest 27,000 in Nordfyns Bank AS on September 1, 2024 and sell it today you would earn a total of 4,600 from holding Nordfyns Bank AS or generate 17.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Nordfyns Bank AS vs. Fundamental Invest Stock
Performance |
| Timeline |
| Nordfyns Bank AS |
| Fundamental Invest Stock |
Nordfyns Bank and Fundamental Invest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordfyns Bank and Fundamental Invest
The main advantage of trading using opposite Nordfyns Bank and Fundamental Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordfyns Bank position performs unexpectedly, Fundamental Invest 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 Fundamental Invest will offset losses from the drop in Fundamental Invest's long position.| Nordfyns Bank vs. Skjern Bank AS | Nordfyns Bank vs. Lollands Bank | Nordfyns Bank vs. Djurslands Bank | Nordfyns Bank vs. Moens Bank AS |
| Fundamental Invest vs. Novo Nordisk AS | Fundamental Invest vs. Nordea Bank Abp | Fundamental Invest vs. DSV Panalpina AS | Fundamental Invest vs. AP Mller |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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