Two Equities Correlation Analysis

This model provides you with a quick lookup of cross correlation between two equities. Please specify two instruments to run the correlation.

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Can any of the company-specific risk be diversified away by investing in both Nordea Invest and DOW at the same time? Although using correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combing Nordea Invest and DOW into the same portfolio which is an essential part of fundamental portfolio management process.

Diversification Opportunities for Nordea Invest and DOW

0.06
Correlation
NI
DOW

Significant diversification

The 3 months correlation between Nordea and DOW is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Invest Europe Enhanced and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW and Nordea Invest 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 Invest Europe are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of Nordea Invest i.e. Nordea Invest and DOW go up and down completely randomly.
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Pair Corralation between Nordea Invest and DOW

Assuming 30 trading days horizon, Nordea Invest Europe is expected to generate 0.63 times more return on investment than DOW. However, Nordea Invest Europe is 1.59 times less risky than DOW. It trades about 0.39 of its potential returns per unit of risk. DOW is currently generating about 0.0 per unit of risk. If you would invest  8,218  in Nordea Invest Europe on April 29, 2020 and sell it today you would earn a total of  489.00  from holding Nordea Invest Europe or generate 5.95% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy9.68%
ValuesDaily Returns

Nordea Invest Europe Enhanced   vs.  DOW

 Performance (%) 
      Timeline 
 Predicted Return Density 
      Returns 
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