Correlation Between BKV and Nordea Bank

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Can any of the company-specific risk be diversified away by investing in both BKV 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 BKV and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKV Corporation and Nordea Bank Abp, you can compare the effects of market volatilities on BKV 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 BKV with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKV and Nordea Bank.

Diversification Opportunities for BKV and Nordea Bank

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between BKV and Nordea is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BKV Corp. 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 BKV 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 BKV Corporation 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 BKV i.e., BKV and Nordea Bank go up and down completely randomly.

Pair Corralation between BKV and Nordea Bank

Considering the 90-day investment horizon BKV Corporation is expected to generate 1.07 times more return on investment than Nordea Bank. However, BKV is 1.07 times more volatile than Nordea Bank Abp. It trades about 0.21 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about -0.11 per unit of risk. If you would invest  1,800  in BKV Corporation on September 26, 2024 and sell it today you would earn a total of  455.00  from holding BKV Corporation or generate 25.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

BKV Corp.  vs.  Nordea Bank Abp

 Performance 
       Timeline  
BKV Corporation 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.
Nordea Bank Abp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nordea Bank Abp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BKV and Nordea Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BKV and Nordea Bank

The main advantage of trading using opposite BKV and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKV 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 BKV Corporation 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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