Correlation Between Nordea Bank and Greif

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

Diversification Opportunities for Nordea Bank and Greif

0.24

Correlation Coefficient

Nordea Bank  Greif

Modest diversification

The 3 months correlation between Nordea and Greif is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Greif Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greif Inc 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 Greif. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greif Inc has no effect on the direction of Nordea Bank i.e., Nordea Bank and Greif go up and down completely randomly.

Pair Corralation between Nordea Bank and Greif

Assuming the 90 days horizon Nordea Bank is expected to generate 2.46 times less return on investment than Greif. But when comparing it to its historical volatility, Nordea Bank Abp is 2.15 times less risky than Greif. It trades about 0.08 of its potential returns per unit of risk. Greif Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,658  in Greif Inc on May 5, 2025 and sell it today you would earn a total of  737.00  from holding Greif Inc or generate 13.03% return on investment over 90 days.

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

Nordea Bank Abp  vs.  Greif Inc

Nordea Bank Abp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Bank Abp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, Nordea Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Greif Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greif Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Greif sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordea Bank and Greif

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

The idea behind Nordea Bank Abp and Greif Inc 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.