Correlation Between Nykredit Invest and NTG Nordic

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

By analyzing existing cross correlation between Nykredit Invest Korte and NTG Nordic Transport, you can compare the effects of market volatilities on Nykredit Invest and NTG Nordic 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 Nykredit Invest with a short position of NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nykredit Invest and NTG Nordic.

Diversification Opportunities for Nykredit Invest and NTG Nordic

-0.47

Correlation Coefficient

Nykredit Invest  NTG Nordic

Very good diversification

The 3 months correlation between Nykredit and NTG is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nykredit Invest Korte and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and Nykredit Invest 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 Nykredit Invest Korte are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Nykredit Invest i.e., Nykredit Invest and NTG Nordic go up and down completely randomly.

Pair Corralation between Nykredit Invest and NTG Nordic

Assuming the 90 days trading horizon Nykredit Invest Korte is expected to generate 0.04 times more return on investment than NTG Nordic. However, Nykredit Invest Korte is 27.47 times less risky than NTG Nordic. It trades about 0.19 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.05 per unit of risk. If you would invest  9,835  in Nykredit Invest Korte on September 16, 2024 and sell it today you would earn a total of  89.00  from holding Nykredit Invest Korte or generate 0.9% return on investment over 90 days.

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

Nykredit Invest Korte  vs.  NTG Nordic Transport

Nykredit Invest Korte

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nykredit Invest Korte are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Nykredit Invest is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

NTG Nordic Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Nykredit Invest and NTG Nordic

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

The idea behind Nykredit Invest Korte and NTG Nordic Transport 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.