Correlation Between Storebrand Global and Nordea 1

Can any of the company-specific risk be diversified away by investing in both Storebrand Global and Nordea 1 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 Storebrand Global and Nordea 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Storebrand Global Solutions and Nordea 1 , you can compare the effects of market volatilities on Storebrand Global and Nordea 1 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 Storebrand Global with a short position of Nordea 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Storebrand Global and Nordea 1.

Diversification Opportunities for Storebrand Global and Nordea 1

0.64

Correlation Coefficient

Storebrand Global  Nordea 1

Poor diversification

The 3 months correlation between Storebrand and Nordea is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Storebrand Global Solutions and Nordea 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea 1 and Storebrand Global 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 Storebrand Global Solutions are associated (or correlated) with Nordea 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea 1 has no effect on the direction of Storebrand Global i.e., Storebrand Global and Nordea 1 go up and down completely randomly.

Pair Corralation between Storebrand Global and Nordea 1

Assuming the 90 days trading horizon Storebrand Global Solutions is expected to under-perform the Nordea 1. In addition to that, Storebrand Global is 1.02 times more volatile than Nordea 1 . It trades about 0.0 of its total potential returns per unit of risk. Nordea 1 is currently generating about 0.08 per unit of volatility. If you would invest  38,608  in Nordea 1 on September 30, 2024 and sell it today you would earn a total of  1,387  from holding Nordea 1 or generate 3.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Storebrand Global Solutions  vs.  Nordea 1

Storebrand Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Storebrand Global Solutions has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, Storebrand Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Nordea 1

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea 1 are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nordea 1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Storebrand Global and Nordea 1

The main advantage of trading using opposite Storebrand Global and Nordea 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Storebrand Global position performs unexpectedly, Nordea 1 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 1 will offset losses from the drop in Nordea 1's long position.

The idea behind Storebrand Global Solutions and Nordea 1 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 Global Correlations module to find global opportunities by holding instruments from different markets.