Correlation Between Nordnet One and Nordea 1

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

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

Diversification Opportunities for Nordnet One and Nordea 1

0.77

Correlation Coefficient

Nordnet One  Nordea 1

Poor diversification

The 3 months correlation between Nordnet and Nordea is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nordnet One Forsiktig and Nordea 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea 1 and Nordnet One 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 Nordnet One Forsiktig 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 Nordnet One i.e., Nordnet One and Nordea 1 go up and down completely randomly.

Pair Corralation between Nordnet One and Nordea 1

Assuming the 90 days trading horizon Nordnet One is expected to generate 2.55 times less return on investment than Nordea 1. But when comparing it to its historical volatility, Nordnet One Forsiktig is 3.67 times less risky than Nordea 1. It trades about 0.2 of its potential returns per unit of risk. Nordea 1 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  38,076  in Nordea 1 on September 19, 2024 and sell it today you would earn a total of  2,608  from holding Nordea 1 or generate 6.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Nordnet One Forsiktig  vs.  Nordea 1

Nordnet One Forsiktig

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nordnet One Forsiktig are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable basic indicators, Nordnet One is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Nordea 1

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea 1 are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nordea 1 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nordnet One and Nordea 1

The main advantage of trading using opposite Nordnet One and Nordea 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordnet One 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 Nordnet One Forsiktig 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.