Correlation Between BankIn Bredygt and Nordea Bank

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

By analyzing existing cross correlation between BankIn Bredygt Klimaakt and Nordea Bank Abp, you can compare the effects of market volatilities on BankIn Bredygt 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 BankIn Bredygt with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankIn Bredygt and Nordea Bank.

Diversification Opportunities for BankIn Bredygt and Nordea Bank

-0.8

Correlation Coefficient

BankIn Bredygt  Nordea Bank

Pay attention - limited upside

The 3 months correlation between BankIn and Nordea is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding BankIn Bredygt Klimaakt 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 BankIn Bredygt 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 BankIn Bredygt Klimaakt 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 BankIn Bredygt i.e., BankIn Bredygt and Nordea Bank go up and down completely randomly.

Pair Corralation between BankIn Bredygt and Nordea Bank

Assuming the 90 days trading horizon BankIn Bredygt Klimaakt is expected to under-perform the Nordea Bank. But the stock apears to be less risky and, when comparing its historical volatility, BankIn Bredygt Klimaakt is 1.18 times less risky than Nordea Bank. The stock trades about -0.25 of its potential returns per unit of risk. The Nordea Bank Abp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  8,032  in Nordea Bank Abp on December 1, 2024 and sell it today you would earn a total of  1,410  from holding Nordea Bank Abp or generate 17.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	60.0%
Values	Daily Returns

BankIn Bredygt Klimaakt  vs.  Nordea Bank Abp

BankIn Bredygt Klimaakt

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankIn Bredygt Klimaakt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nordea Bank Abp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Bank Abp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Nordea Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BankIn Bredygt and Nordea Bank

The main advantage of trading using opposite BankIn Bredygt and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BankIn Bredygt 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 BankIn Bredygt Klimaakt 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.