Correlation Between Nordea Bank and Axfood AB

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

Diversification Opportunities for Nordea Bank and Axfood AB

-0.73

Correlation Coefficient

Nordea Bank  Axfood AB

Pay attention - limited upside

The 3 months correlation between Nordea and Axfood is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Nordea Bank i.e., Nordea Bank and Axfood AB go up and down completely randomly.

Pair Corralation between Nordea Bank and Axfood AB

Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.71 times more return on investment than Axfood AB. However, Nordea Bank Abp is 1.4 times less risky than Axfood AB. It trades about 0.02 of its potential returns per unit of risk. Axfood AB is currently generating about -0.11 per unit of risk. If you would invest  12,165  in Nordea Bank Abp on August 31, 2024 and sell it today you would earn a total of  170.00  from holding Nordea Bank Abp or generate 1.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Nordea Bank Abp  vs.  Axfood AB

Nordea Bank Abp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Bank Abp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nordea Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Axfood AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axfood AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Nordea Bank and Axfood AB

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

The idea behind Nordea Bank Abp and Axfood AB 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.