Correlation Between Sandvik AB and Nordex SE
Can any of the company-specific risk be diversified away by investing in both Sandvik AB and Nordex SE 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 Sandvik AB and Nordex SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandvik AB ADR and Nordex SE, you can compare the effects of market volatilities on Sandvik AB and Nordex SE 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 Sandvik AB with a short position of Nordex SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandvik AB and Nordex SE.
Diversification Opportunities for Sandvik AB and Nordex SE
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sandvik and Nordex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sandvik AB ADR and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE and Sandvik AB 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 Sandvik AB ADR are associated (or correlated) with Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of Sandvik AB i.e., Sandvik AB and Nordex SE go up and down completely randomly.
Pair Corralation between Sandvik AB and Nordex SE
Assuming the 90 days horizon Sandvik AB ADR is expected to under-perform the Nordex SE. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sandvik AB ADR is 1.99 times less risky than Nordex SE. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Nordex SE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in Nordex SE on August 29, 2024 and sell it today you would earn a total of 423.00 from holding Nordex SE or generate 42.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandvik AB ADR vs. Nordex SE
Performance |
| Timeline |
| Sandvik AB ADR |
| Nordex SE |
Sandvik AB and Nordex SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandvik AB and Nordex SE
The main advantage of trading using opposite Sandvik AB and Nordex SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandvik AB position performs unexpectedly, Nordex SE 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 Nordex SE will offset losses from the drop in Nordex SE's long position.| Sandvik AB vs. Parker Hannifin | Sandvik AB vs. Eaton PLC | Sandvik AB vs. Dover | Sandvik AB vs. Illinois Tool Works |
| Nordex SE vs. Atlas Copco AB | Nordex SE vs. Atlas Copco ADR | Nordex SE vs. Siemens AG Class | Nordex SE vs. Sandvik AB ADR |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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