Correlation Between Maj Invest and Nykredit Invest

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

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

Diversification Opportunities for Maj Invest and Nykredit Invest

0.96

Correlation Coefficient

Maj Invest  Nykredit Invest

Almost no diversification

The 3 months correlation between Maj and Nykredit is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Maj Invest and Nykredit Invest Korte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nykredit Invest Korte and Maj Invest 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 Maj Invest 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 Korte has no effect on the direction of Maj Invest i.e., Maj Invest and Nykredit Invest go up and down completely randomly.

Pair Corralation between Maj Invest and Nykredit Invest

Assuming the 90 days trading horizon Maj Invest is expected to generate 1.87 times more return on investment than Nykredit Invest. However, Maj Invest is 1.87 times more volatile than Nykredit Invest Korte. It trades about 0.19 of its potential returns per unit of risk. Nykredit Invest Korte is currently generating about 0.22 per unit of risk. If you would invest  9,120  in Maj Invest on September 14, 2024 and sell it today you would earn a total of  980.00  from holding Maj Invest or generate 10.75% return on investment over 90 days.

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

Maj Invest   vs.  Nykredit Invest Korte

Maj Invest

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong forward-looking indicators, Maj Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nykredit Invest Korte

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nykredit Invest Korte are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. 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 Maj Invest and Nykredit Invest

The main advantage of trading using opposite Maj Invest and Nykredit Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maj Invest 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 Maj Invest and Nykredit Invest Korte 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.