Correlation Between Citigroup and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both Citigroup 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 Citigroup and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Novo Nordisk AS, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Novo Nordisk.
Diversification Opportunities for Citigroup and Novo Nordisk
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Novo is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup 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 Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Novo Nordisk go up and down completely randomly.
Pair Corralation between Citigroup and Novo Nordisk
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.93 times more return on investment than Novo Nordisk. However, Citigroup is 1.08 times less risky than Novo Nordisk. It trades about 0.07 of its potential returns per unit of risk. Novo Nordisk AS is currently generating about -0.08 per unit of risk. If you would invest 6,088 in Citigroup on August 27, 2024 and sell it today you would earn a total of 987.00 from holding Citigroup or generate 16.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Novo Nordisk AS
Performance |
| Timeline |
| Citigroup |
| Novo Nordisk AS |
Citigroup and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Novo Nordisk
The main advantage of trading using opposite Citigroup and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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