Correlation Between Bondbloxx ETF and Nordea Bank

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

By analyzing existing cross correlation between Bondbloxx ETF Trust and Nordea Bank Abp, you can compare the effects of market volatilities on Bondbloxx ETF and Nordea Bank 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 Bondbloxx ETF with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bondbloxx ETF and Nordea Bank.

Diversification Opportunities for Bondbloxx ETF and Nordea Bank

0.95

Correlation Coefficient

Bondbloxx ETF  Nordea Bank

Almost no diversification

The 3 months correlation between Bondbloxx and Nordea is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bondbloxx ETF Trust and Nordea Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Bank Abp and Bondbloxx ETF 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 Bondbloxx ETF Trust are associated (or correlated) with Nordea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Bank Abp has no effect on the direction of Bondbloxx ETF i.e., Bondbloxx ETF and Nordea Bank go up and down completely randomly.

Pair Corralation between Bondbloxx ETF and Nordea Bank

Given the investment horizon of 90 days Bondbloxx ETF is expected to generate 17.41 times less return on investment than Nordea Bank. But when comparing it to its historical volatility, Bondbloxx ETF Trust is 22.86 times less risky than Nordea Bank. It trades about 0.29 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,007  in Nordea Bank Abp on December 29, 2024 and sell it today you would earn a total of  308.00  from holding Nordea Bank Abp or generate 30.59% return on investment over 90 days.

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

Bondbloxx ETF Trust  vs.  Nordea Bank Abp

Bondbloxx ETF Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bondbloxx ETF Trust are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bondbloxx ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Nordea Bank Abp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Bank Abp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Nordea Bank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bondbloxx ETF and Nordea Bank

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

The idea behind Bondbloxx ETF Trust and Nordea Bank Abp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.