Correlation Between Nordea Bank and Provident Bancorp
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Provident Bancorp 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 Provident Bancorp 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 Provident Bancorp, you can compare the effects of market volatilities on Nordea Bank and Provident Bancorp 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 Provident Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Provident Bancorp.
Diversification Opportunities for Nordea Bank and Provident Bancorp
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nordea and Provident is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Provident Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident 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 Provident Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Bancorp has no effect on the direction of Nordea Bank i.e., Nordea Bank and Provident Bancorp go up and down completely randomly.
Pair Corralation between Nordea Bank and Provident Bancorp
Assuming the 90 days horizon Nordea Bank Abp is expected to generate 0.47 times more return on investment than Provident Bancorp. However, Nordea Bank Abp is 2.13 times less risky than Provident Bancorp. It trades about 0.15 of its potential returns per unit of risk. Provident Bancorp is currently generating about -0.07 per unit of risk. If you would invest 1,122 in Nordea Bank Abp on February 1, 2024 and sell it today you would earn a total of 52.00 from holding Nordea Bank Abp or generate 4.63% 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. Provident Bancorp
Performance |
Timeline |
Nordea Bank Abp |
Provident Bancorp |
Nordea Bank and Provident Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nordea Bank and Provident Bancorp
The main advantage of trading using opposite Nordea Bank and Provident Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Provident Bancorp 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 Provident Bancorp will offset losses from the drop in Provident Bancorp's long position.Nordea Bank vs. Home Federal Bancorp | Nordea Bank vs. HMN Financial | Nordea Bank vs. Affinity Bancshares | Nordea Bank vs. Community West Bancshares |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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