Correlation Between Red Cat and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both Red Cat and Nordea Bank 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 Red Cat and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Cat Holdings and Nordea Bank Abp, you can compare the effects of market volatilities on Red Cat and Nordea Bank 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 Red Cat with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Nordea Bank.
Diversification Opportunities for Red Cat and Nordea Bank
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Red and Nordea is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Nordea Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Bank Abp and Red Cat 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 Red Cat Holdings are associated (or correlated) with Nordea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Bank Abp has no effect on the direction of Red Cat i.e., Red Cat and Nordea Bank go up and down completely randomly.
Pair Corralation between Red Cat and Nordea Bank
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 8.09 times more return on investment than Nordea Bank. However, Red Cat is 8.09 times more volatile than Nordea Bank Abp. It trades about 0.63 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about -0.22 per unit of risk. If you would invest 269.00 in Red Cat Holdings on August 26, 2024 and sell it today you would earn a total of 628.00 from holding Red Cat Holdings or generate 233.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Cat Holdings vs. Nordea Bank Abp
Performance |
| Timeline |
| Red Cat Holdings |
| Nordea Bank Abp |
Red Cat and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Nordea Bank
The main advantage of trading using opposite Red Cat and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Nordea Bank 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 Nordea Bank will offset losses from the drop in Nordea Bank's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Nordea Bank vs. United Overseas Bank | Nordea Bank vs. KBC Groep NV | Nordea Bank vs. Bank Mandiri Persero | Nordea Bank vs. Overseas Chinese Banking |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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