Correlation Between Nordea Bank and Valley National

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

Diversification Opportunities for Nordea Bank and Valley National

-0.26

Correlation Coefficient

Nordea Bank  Valley National

Very good diversification

The 3 months correlation between Nordea and Valley is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp 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 Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Nordea Bank i.e., Nordea Bank and Valley National go up and down completely randomly.

Pair Corralation between Nordea Bank and Valley National

Assuming the 90 days horizon Nordea Bank is expected to generate 147.11 times less return on investment than Valley National. In addition to that, Nordea Bank is 1.16 times more volatile than Valley National Bancorp. It trades about 0.0 of its total potential returns per unit of risk. Valley National Bancorp is currently generating about 0.1 per unit of volatility. If you would invest  1,852  in Valley National Bancorp on September 4, 2024 and sell it today you would earn a total of  664.00  from holding Valley National Bancorp or generate 35.85% return on investment over 90 days.

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

Nordea Bank Abp  vs.  Valley National Bancorp

Nordea Bank Abp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordea Bank Abp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Nordea Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Valley National Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valley National Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Valley National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nordea Bank and Valley National

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

The idea behind Nordea Bank Abp and Valley National Bancorp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.