Correlation Between KLP AksjeGlobal and Nordea 1

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

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

Diversification Opportunities for KLP AksjeGlobal and Nordea 1

0.28

Correlation Coefficient

KLP AksjeGlobal  Nordea 1

Modest diversification

The 3 months correlation between KLP and Nordea is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding KLP AksjeGlobal Flerfaktor and Nordea 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea 1 and KLP AksjeGlobal 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 KLP AksjeGlobal Flerfaktor 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 has no effect on the direction of KLP AksjeGlobal i.e., KLP AksjeGlobal and Nordea 1 go up and down completely randomly.

Pair Corralation between KLP AksjeGlobal and Nordea 1

Assuming the 90 days trading horizon KLP AksjeGlobal Flerfaktor is expected to generate 0.64 times more return on investment than Nordea 1. However, KLP AksjeGlobal Flerfaktor is 1.57 times less risky than Nordea 1. It trades about 0.02 of its potential returns per unit of risk. Nordea 1 is currently generating about -0.13 per unit of risk. If you would invest  236,404  in KLP AksjeGlobal Flerfaktor on December 26, 2024 and sell it today you would earn a total of  1,067  from holding KLP AksjeGlobal Flerfaktor or generate 0.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

KLP AksjeGlobal Flerfaktor  vs.  Nordea 1

KLP AksjeGlobal Fler

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KLP AksjeGlobal Flerfaktor are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, KLP AksjeGlobal is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Nordea 1

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordea 1 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with KLP AksjeGlobal and Nordea 1

The main advantage of trading using opposite KLP AksjeGlobal and Nordea 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLP AksjeGlobal 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 KLP AksjeGlobal Flerfaktor and Nordea 1 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.