Correlation Between CARDINAL HEALTH and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both CARDINAL HEALTH 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 CARDINAL HEALTH and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARDINAL HEALTH and Novo Nordisk AS, you can compare the effects of market volatilities on CARDINAL HEALTH 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 CARDINAL HEALTH with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARDINAL HEALTH and Novo Nordisk.
Diversification Opportunities for CARDINAL HEALTH and Novo Nordisk
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CARDINAL and Novo is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH 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 CARDINAL HEALTH 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 CARDINAL HEALTH 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 CARDINAL HEALTH i.e., CARDINAL HEALTH and Novo Nordisk go up and down completely randomly.
Pair Corralation between CARDINAL HEALTH and Novo Nordisk
Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.11 times more return on investment than Novo Nordisk. However, CARDINAL HEALTH is 9.36 times less risky than Novo Nordisk. It trades about 0.65 of its potential returns per unit of risk. Novo Nordisk AS is currently generating about -0.2 per unit of risk. If you would invest 11,140 in CARDINAL HEALTH on October 15, 2024 and sell it today you would earn a total of 700.00 from holding CARDINAL HEALTH or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARDINAL HEALTH vs. Novo Nordisk AS
Performance |
| Timeline |
| CARDINAL HEALTH |
| Novo Nordisk AS |
CARDINAL HEALTH and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARDINAL HEALTH and Novo Nordisk
The main advantage of trading using opposite CARDINAL HEALTH and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARDINAL HEALTH 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.| CARDINAL HEALTH vs. GameStop Corp | CARDINAL HEALTH vs. PLAYMATES TOYS | CARDINAL HEALTH vs. BRIT AMER TOBACCO | CARDINAL HEALTH vs. Penn National Gaming |
| Novo Nordisk vs. CARDINAL HEALTH | Novo Nordisk vs. YOOMA WELLNESS INC | Novo Nordisk vs. BE Semiconductor Industries | Novo Nordisk vs. Elmos Semiconductor SE |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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