Correlation Between Swedbank and Valley National

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

By analyzing existing cross correlation between Swedbank AB and Valley National Bancorp, you can compare the effects of market volatilities on Swedbank 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 Swedbank with a short position of Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and Valley National.

Diversification Opportunities for Swedbank and Valley National

-0.61

Correlation Coefficient

Swedbank  Valley National

Excellent diversification

The 3 months correlation between Swedbank and Valley is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB 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 Swedbank 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 Swedbank AB 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 Swedbank i.e., Swedbank and Valley National go up and down completely randomly.

Pair Corralation between Swedbank and Valley National

Assuming the 90 days horizon Swedbank AB is expected to under-perform the Valley National. In addition to that, Swedbank is 1.97 times more volatile than Valley National Bancorp. It trades about -0.06 of its total potential returns per unit of risk. Valley National Bancorp is currently generating about 0.15 per unit of volatility. If you would invest  2,339  in Valley National Bancorp on September 4, 2024 and sell it today you would earn a total of  177.00  from holding Valley National Bancorp or generate 7.57% return on investment over 90 days.

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

Swedbank AB  vs.  Valley National Bancorp

Swedbank AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swedbank AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Swedbank is not utilizing all of its potentials. The recent 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 Swedbank and Valley National

The main advantage of trading using opposite Swedbank and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank 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 Swedbank AB 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.