Correlation Between Nordea Bank and Tulikivi Oyj

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

Diversification Opportunities for Nordea Bank and Tulikivi Oyj

0.97

Correlation Coefficient

Nordea Bank  Tulikivi Oyj

Almost no diversification

The 3 months correlation between Nordea and Tulikivi is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Tulikivi Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tulikivi Oyj A 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 Tulikivi Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tulikivi Oyj A has no effect on the direction of Nordea Bank i.e., Nordea Bank and Tulikivi Oyj go up and down completely randomly.

Pair Corralation between Nordea Bank and Tulikivi Oyj

Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.67 times more return on investment than Tulikivi Oyj. However, Nordea Bank Abp is 1.49 times less risky than Tulikivi Oyj. It trades about 0.29 of its potential returns per unit of risk. Tulikivi Oyj A is currently generating about 0.18 per unit of risk. If you would invest  969.00  in Nordea Bank Abp on December 25, 2024 and sell it today you would earn a total of  225.00  from holding Nordea Bank Abp or generate 23.22% return on investment over 90 days.

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

Nordea Bank Abp  vs.  Tulikivi Oyj A

Nordea Bank Abp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Bank Abp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Nordea Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Tulikivi Oyj A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tulikivi Oyj A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Tulikivi Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordea Bank and Tulikivi Oyj

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

The idea behind Nordea Bank Abp and Tulikivi Oyj A 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.