Correlation Between Swedbank and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both Swedbank 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 Swedbank and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedbank AB and Nordea Bank Abp, you can compare the effects of market volatilities on Swedbank 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 Swedbank with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and Nordea Bank.
Diversification Opportunities for Swedbank and Nordea Bank
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Swedbank and Nordea is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB 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 Swedbank 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 Swedbank AB 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 Swedbank i.e., Swedbank and Nordea Bank go up and down completely randomly.
Pair Corralation between Swedbank and Nordea Bank
Assuming the 90 days horizon Swedbank AB is expected to generate 1.2 times more return on investment than Nordea Bank. However, Swedbank is 1.2 times more volatile than Nordea Bank Abp. It trades about 0.04 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about 0.03 per unit of risk. If you would invest 1,433 in Swedbank AB on August 26, 2024 and sell it today you would earn a total of 508.00 from holding Swedbank AB or generate 35.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Swedbank AB vs. Nordea Bank Abp
Performance |
| Timeline |
| Swedbank AB |
| Nordea Bank Abp |
Swedbank and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedbank and Nordea Bank
The main advantage of trading using opposite Swedbank and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank 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.| Swedbank vs. United Overseas Bank | Swedbank vs. KBC Groep NV | Swedbank vs. Jyske Bank AS | Swedbank vs. Israel Discount Bank |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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