Correlation Between Nordea Bank and Canadian Western
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Canadian Western 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 Canadian Western 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 Canadian Western Bank, you can compare the effects of market volatilities on Nordea Bank and Canadian Western 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 Canadian Western. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Canadian Western.
Diversification Opportunities for Nordea Bank and Canadian Western
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordea and Canadian is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Canadian Western Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Western Bank 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 Canadian Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Western Bank has no effect on the direction of Nordea Bank i.e., Nordea Bank and Canadian Western go up and down completely randomly.
Pair Corralation between Nordea Bank and Canadian Western
Assuming the 90 days horizon Nordea Bank Abp is expected to under-perform the Canadian Western. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nordea Bank Abp is 1.05 times less risky than Canadian Western. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Canadian Western Bank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,985 in Canadian Western Bank on October 1, 2024 and sell it today you would earn a total of 107.00 from holding Canadian Western Bank or generate 2.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Nordea Bank Abp vs. Canadian Western Bank
Performance |
Timeline |
Nordea Bank Abp |
Canadian Western Bank |
Nordea Bank and Canadian Western Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nordea Bank and Canadian Western
The main advantage of trading using opposite Nordea Bank and Canadian Western positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Canadian Western 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 Canadian Western will offset losses from the drop in Canadian Western's long position.Nordea Bank vs. United Overseas Bank | ||
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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