Correlation Between Nordea Bank and BankInvest

Can any of the company-specific risk be diversified away by investing in both Nordea Bank and BankInvest 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 BankInvest 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 BankInvest EM Aktier, you can compare the effects of market volatilities on Nordea Bank and BankInvest 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 BankInvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and BankInvest.

Diversification Opportunities for Nordea Bank and BankInvest

0.0

Correlation Coefficient

Nordea Bank  BankInvest

Pay attention - limited upside

The 3 months correlation between Nordea and BankInvest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and BankInvest EM Aktier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest EM Aktier 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 BankInvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest EM Aktier has no effect on the direction of Nordea Bank i.e., Nordea Bank and BankInvest go up and down completely randomly.

Pair Corralation between Nordea Bank and BankInvest

If you would invest  7,782  in Nordea Bank Abp on December 27, 2024 and sell it today you would earn a total of  1,306  from holding Nordea Bank Abp or generate 16.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nordea Bank Abp  vs.  BankInvest EM Aktier

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 13 (%) 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.

BankInvest EM Aktier

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankInvest EM Aktier has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BankInvest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nordea Bank and BankInvest

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

The idea behind Nordea Bank Abp and BankInvest EM Aktier 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.