Correlation Between Nordea Bank and Duell Oyj

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

Diversification Opportunities for Nordea Bank and Duell Oyj

0.24

Correlation Coefficient

Nordea Bank  Duell Oyj

Modest diversification

The 3 months correlation between Nordea and Duell is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Duell Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duell Oyj 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 Duell Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duell Oyj has no effect on the direction of Nordea Bank i.e., Nordea Bank and Duell Oyj go up and down completely randomly.

Pair Corralation between Nordea Bank and Duell Oyj

Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.28 times more return on investment than Duell Oyj. However, Nordea Bank Abp is 3.6 times less risky than Duell Oyj. It trades about 0.03 of its potential returns per unit of risk. Duell Oyj is currently generating about -0.05 per unit of risk. If you would invest  901.00  in Nordea Bank Abp on September 26, 2024 and sell it today you would earn a total of  129.00  from holding Nordea Bank Abp or generate 14.32% return on investment over 90 days.

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

Nordea Bank Abp  vs.  Duell Oyj

Nordea Bank Abp

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Nordea Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Duell Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duell Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Duell Oyj is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nordea Bank and Duell Oyj

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

The idea behind Nordea Bank Abp and Duell Oyj 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.