Correlation Between Nova Europe and Nordea 1

Can any of the company-specific risk be diversified away by investing in both Nova Europe and Nordea 1 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 Nova Europe and Nordea 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nova Europe ISR and Nordea 1 SICAV, you can compare the effects of market volatilities on Nova Europe and Nordea 1 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 Nova Europe with a short position of Nordea 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Europe and Nordea 1.

Diversification Opportunities for Nova Europe and Nordea 1

0.0

Correlation Coefficient

Nova Europe  Nordea 1

Pay attention - limited upside

The 3 months correlation between Nova and Nordea is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nova Europe ISR and Nordea 1 SICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea 1 SICAV and Nova Europe 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 Nova Europe ISR are associated (or correlated) with Nordea 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea 1 SICAV has no effect on the direction of Nova Europe i.e., Nova Europe and Nordea 1 go up and down completely randomly.

Pair Corralation between Nova Europe and Nordea 1

If you would invest (100.00) in Nordea 1 SICAV on September 23, 2024 and sell it today you would earn a total of  100.00  from holding Nordea 1 SICAV or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nova Europe ISR  vs.  Nordea 1 SICAV

Nova Europe ISR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Europe ISR has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Nova Europe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nordea 1 SICAV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordea 1 SICAV has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Nordea 1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nova Europe and Nordea 1

The main advantage of trading using opposite Nova Europe and Nordea 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Europe position performs unexpectedly, Nordea 1 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 1 will offset losses from the drop in Nordea 1's long position.

The idea behind Nova Europe ISR and Nordea 1 SICAV 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.