Correlation Between Vestas Wind and Nordea Invest

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

By analyzing existing cross correlation between Vestas Wind Systems and Nordea Invest Global, you can compare the effects of market volatilities on Vestas Wind and Nordea 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 Vestas Wind with a short position of Nordea Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Nordea Invest.

Diversification Opportunities for Vestas Wind and Nordea Invest

-0.29

Correlation Coefficient

Vestas Wind  Nordea Invest

Very good diversification

The 3 months correlation between Vestas and Nordea is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Nordea Invest Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Invest Global and Vestas Wind 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 Vestas Wind Systems are associated (or correlated) with Nordea Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Invest Global has no effect on the direction of Vestas Wind i.e., Vestas Wind and Nordea Invest go up and down completely randomly.

Pair Corralation between Vestas Wind and Nordea Invest

Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the Nordea Invest. In addition to that, Vestas Wind is 4.31 times more volatile than Nordea Invest Global. It trades about -0.06 of its total potential returns per unit of risk. Nordea Invest Global is currently generating about -0.22 per unit of volatility. If you would invest  4,542  in Nordea Invest Global on October 11, 2024 and sell it today you would lose (117.00) from holding Nordea Invest Global or give up 2.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Vestas Wind Systems  vs.  Nordea Invest Global

Vestas Wind Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vestas Wind Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Nordea Invest Global

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Invest Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Nordea Invest is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Vestas Wind and Nordea Invest

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

The idea behind Vestas Wind Systems and Nordea Invest Global 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.