Correlation Between Nordea Bank and TradeDoubler

Can any of the company-specific risk be diversified away by investing in both Nordea Bank and TradeDoubler 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 TradeDoubler 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 TradeDoubler AB, you can compare the effects of market volatilities on Nordea Bank and TradeDoubler 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 TradeDoubler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and TradeDoubler.

Diversification Opportunities for Nordea Bank and TradeDoubler

0.53

Correlation Coefficient

Nordea Bank  TradeDoubler

Very weak diversification

The 3 months correlation between Nordea and TradeDoubler is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and TradeDoubler AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TradeDoubler 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 TradeDoubler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TradeDoubler AB has no effect on the direction of Nordea Bank i.e., Nordea Bank and TradeDoubler go up and down completely randomly.

Pair Corralation between Nordea Bank and TradeDoubler

Assuming the 90 days trading horizon Nordea Bank is expected to generate 1.77 times less return on investment than TradeDoubler. But when comparing it to its historical volatility, Nordea Bank Abp is 1.46 times less risky than TradeDoubler. It trades about 0.06 of its potential returns per unit of risk. TradeDoubler AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  332.00  in TradeDoubler AB on September 4, 2024 and sell it today you would earn a total of  24.00  from holding TradeDoubler AB or generate 7.23% return on investment over 90 days.

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

Nordea Bank Abp  vs.  TradeDoubler AB

Nordea Bank Abp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Bank Abp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nordea Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

TradeDoubler AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TradeDoubler AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, TradeDoubler may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nordea Bank and TradeDoubler

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

The idea behind Nordea Bank Abp and TradeDoubler AB 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.