Correlation Between Nordea Bank and FastPartner
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and FastPartner 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 Nordea Bank and FastPartner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordea Bank Abp and FastPartner AB, you can compare the effects of market volatilities on Nordea Bank and FastPartner 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 Nordea Bank with a short position of FastPartner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and FastPartner.
Diversification Opportunities for Nordea Bank and FastPartner
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nordea and FastPartner is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and FastPartner AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FastPartner AB and Nordea Bank 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 Nordea Bank Abp are associated (or correlated) with FastPartner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FastPartner AB has no effect on the direction of Nordea Bank i.e., Nordea Bank and FastPartner go up and down completely randomly.
Pair Corralation between Nordea Bank and FastPartner
Assuming the 90 days trading horizon Nordea Bank Abp is expected to under-perform the FastPartner. But the stock apears to be less risky and, when comparing its historical volatility, Nordea Bank Abp is 1.99 times less risky than FastPartner. The stock trades about -0.07 of its potential returns per unit of risk. The FastPartner AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,050 in FastPartner AB on September 6, 2024 and sell it today you would earn a total of 50.00 from holding FastPartner AB or generate 0.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.65% |
Values | Daily Returns |
Nordea Bank Abp vs. FastPartner AB
Performance |
Timeline |
Nordea Bank Abp |
FastPartner AB |
Nordea Bank and FastPartner Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nordea Bank and FastPartner
The main advantage of trading using opposite Nordea Bank and FastPartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, FastPartner 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 FastPartner will offset losses from the drop in FastPartner's long position.Nordea Bank vs. Swedbank AB | Nordea Bank vs. Train Alliance Sweden | Nordea Bank vs. Arion banki hf | Nordea Bank vs. Scandic Hotels Group |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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