Correlation Between Nordea Bank and Alm Brand

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

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

Diversification Opportunities for Nordea Bank and Alm Brand

0.89

Correlation Coefficient

Nordea Bank  Alm Brand

Very poor diversification

The 3 months correlation between Nordea and Alm is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Alm Brand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alm Brand and Nordea Bank 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 Nordea Bank Abp are associated (or correlated) with Alm Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alm Brand has no effect on the direction of Nordea Bank i.e., Nordea Bank and Alm Brand go up and down completely randomly.

Pair Corralation between Nordea Bank and Alm Brand

Assuming the 90 days trading horizon Nordea Bank is expected to generate 1.21 times less return on investment than Alm Brand. In addition to that, Nordea Bank is 1.24 times more volatile than Alm Brand. It trades about 0.15 of its total potential returns per unit of risk. Alm Brand is currently generating about 0.23 per unit of volatility. If you would invest  1,403  in Alm Brand on December 30, 2024 and sell it today you would earn a total of  257.00  from holding Alm Brand or generate 18.32% return on investment over 90 days.

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

Nordea Bank Abp  vs.  Alm Brand

Nordea Bank Abp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Bank Abp are ranked lower than 11 (%) 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.

Alm Brand

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alm Brand are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Alm Brand displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordea Bank and Alm Brand

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

The idea behind Nordea Bank Abp and Alm Brand 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.