Correlation Between Bavarian Nordic and Nykredit Invest

Can any of the company-specific risk be diversified away by investing in both Bavarian Nordic and Nykredit Invest 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 Bavarian Nordic and Nykredit Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bavarian Nordic and Nykredit Invest Danske, you can compare the effects of market volatilities on Bavarian Nordic and Nykredit Invest 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 Bavarian Nordic with a short position of Nykredit Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and Nykredit Invest.

Diversification Opportunities for Bavarian Nordic and Nykredit Invest

0.46

Correlation Coefficient

Bavarian Nordic  Nykredit Invest

Very weak diversification

The 3 months correlation between Bavarian and Nykredit is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and Nykredit Invest Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nykredit Invest Danske and Bavarian Nordic 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 Bavarian Nordic are associated (or correlated) with Nykredit Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nykredit Invest Danske has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and Nykredit Invest go up and down completely randomly.

Pair Corralation between Bavarian Nordic and Nykredit Invest

Assuming the 90 days trading horizon Bavarian Nordic is expected to generate 3.46 times more return on investment than Nykredit Invest. However, Bavarian Nordic is 3.46 times more volatile than Nykredit Invest Danske. It trades about -0.03 of its potential returns per unit of risk. Nykredit Invest Danske is currently generating about -0.1 per unit of risk. If you would invest  21,910  in Bavarian Nordic on October 8, 2024 and sell it today you would lose (1,945) from holding Bavarian Nordic or give up 8.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bavarian Nordic  vs.  Nykredit Invest Danske

Bavarian Nordic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bavarian Nordic is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Nykredit Invest Danske

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nykredit Invest Danske has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Nykredit Invest is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bavarian Nordic and Nykredit Invest

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

The idea behind Bavarian Nordic and Nykredit Invest Danske 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.