Correlation Between Nordfyns Bank and Fundamental Invest

Can any of the company-specific risk be diversified away by investing in both Nordfyns Bank and Fundamental Invest 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 Nordfyns Bank and Fundamental Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nordfyns Bank AS and Fundamental Invest Stock, you can compare the effects of market volatilities on Nordfyns Bank and Fundamental Invest 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 Nordfyns Bank with a short position of Fundamental Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordfyns Bank and Fundamental Invest.

Diversification Opportunities for Nordfyns Bank and Fundamental Invest

0.51

Correlation Coefficient

Nordfyns Bank  Fundamental Invest

Very weak diversification

The 3 months correlation between Nordfyns and Fundamental is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nordfyns Bank AS and Fundamental Invest Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Invest Stock and Nordfyns 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 Nordfyns Bank AS are associated (or correlated) with Fundamental Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Invest Stock has no effect on the direction of Nordfyns Bank i.e., Nordfyns Bank and Fundamental Invest go up and down completely randomly.

Pair Corralation between Nordfyns Bank and Fundamental Invest

Assuming the 90 days trading horizon Nordfyns Bank AS is expected to generate 1.01 times more return on investment than Fundamental Invest. However, Nordfyns Bank is 1.01 times more volatile than Fundamental Invest Stock. It trades about -0.06 of its potential returns per unit of risk. Fundamental Invest Stock is currently generating about -0.07 per unit of risk. If you would invest  35,200  in Nordfyns Bank AS on October 9, 2024 and sell it today you would lose (1,200) from holding Nordfyns Bank AS or give up 3.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Nordfyns Bank AS  vs.  Fundamental Invest Stock

Nordfyns Bank AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordfyns Bank AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Nordfyns Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fundamental Invest Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundamental Invest Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Fundamental Invest is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nordfyns Bank and Fundamental Invest

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

The idea behind Nordfyns Bank AS and Fundamental Invest Stock 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.