Correlation Between ALK Abell and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both ALK Abell and Novo Nordisk 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 ALK Abell and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALK Abell AS and Novo Nordisk AS, you can compare the effects of market volatilities on ALK Abell and Novo Nordisk 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 ALK Abell with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALK Abell and Novo Nordisk.
Diversification Opportunities for ALK Abell and Novo Nordisk
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between ALK and Novo is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ALK Abell AS and Novo Nordisk AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novo Nordisk AS and ALK Abell 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 ALK Abell AS are associated (or correlated) with Novo Nordisk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novo Nordisk AS has no effect on the direction of ALK Abell i.e., ALK Abell and Novo Nordisk go up and down completely randomly.
Pair Corralation between ALK Abell and Novo Nordisk
Assuming the 90 days horizon ALK Abell AS is expected to generate 0.74 times more return on investment than Novo Nordisk. However, ALK Abell AS is 1.35 times less risky than Novo Nordisk. It trades about -0.02 of its potential returns per unit of risk. Novo Nordisk AS is currently generating about -0.12 per unit of risk. If you would invest 2,200 in ALK Abell AS on October 16, 2024 and sell it today you would lose (170.00) from holding ALK Abell AS or give up 7.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
ALK Abell AS vs. Novo Nordisk AS
Performance |
| Timeline |
| ALK Abell AS |
| Novo Nordisk AS |
ALK Abell and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALK Abell and Novo Nordisk
The main advantage of trading using opposite ALK Abell and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALK Abell position performs unexpectedly, Novo Nordisk 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 Novo Nordisk will offset losses from the drop in Novo Nordisk's long position.| ALK Abell vs. Novo Nordisk AS | ALK Abell vs. Novo Nordisk AS | ALK Abell vs. Vertex Pharmaceuticals | ALK Abell vs. CSL |
| Novo Nordisk vs. Regeneron Pharmaceuticals | Novo Nordisk vs. Crispr Therapeutics AG | Novo Nordisk vs. Sarepta Therapeutics | Novo Nordisk vs. Intellia Therapeutics |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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