Correlation Between Scandic Hotels and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both Scandic Hotels 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 Scandic Hotels and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandic Hotels Group and Nordea Bank Abp, you can compare the effects of market volatilities on Scandic Hotels 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 Scandic Hotels with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and Nordea Bank.
Diversification Opportunities for Scandic Hotels and Nordea Bank
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Scandic and Nordea is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group 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 Scandic Hotels 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 Scandic Hotels Group 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 Scandic Hotels i.e., Scandic Hotels and Nordea Bank go up and down completely randomly.
Pair Corralation between Scandic Hotels and Nordea Bank
Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 1.41 times more return on investment than Nordea Bank. However, Scandic Hotels is 1.41 times more volatile than Nordea Bank Abp. It trades about 0.34 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about 0.33 per unit of risk. If you would invest 6,925 in Scandic Hotels Group on November 3, 2024 and sell it today you would earn a total of 805.00 from holding Scandic Hotels Group or generate 11.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandic Hotels Group vs. Nordea Bank Abp
Performance |
| Timeline |
| Scandic Hotels Group |
| Nordea Bank Abp |
Scandic Hotels and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandic Hotels and Nordea Bank
The main advantage of trading using opposite Scandic Hotels and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels 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.The idea behind Scandic Hotels Group and Nordea Bank Abp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nordea Bank vs. USWE Sports AB | Nordea Bank vs. Media and Games | Nordea Bank vs. White Pearl Technology | Nordea Bank vs. Fractal Gaming Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |