Correlation Between Edesa Biotech and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both Edesa Biotech 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 Edesa Biotech and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edesa Biotech and Novo Nordisk AS, you can compare the effects of market volatilities on Edesa Biotech 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 Edesa Biotech with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edesa Biotech and Novo Nordisk.
Diversification Opportunities for Edesa Biotech and Novo Nordisk
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Edesa and Novo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Edesa Biotech 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 Edesa Biotech 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 Edesa Biotech 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 Edesa Biotech i.e., Edesa Biotech and Novo Nordisk go up and down completely randomly.
Pair Corralation between Edesa Biotech and Novo Nordisk
Given the investment horizon of 90 days Edesa Biotech is expected to under-perform the Novo Nordisk. In addition to that, Edesa Biotech is 2.71 times more volatile than Novo Nordisk AS. It trades about -0.36 of its total potential returns per unit of risk. Novo Nordisk AS is currently generating about -0.15 per unit of volatility. If you would invest 11,236 in Novo Nordisk AS on August 27, 2024 and sell it today you would lose (730.00) from holding Novo Nordisk AS or give up 6.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edesa Biotech vs. Novo Nordisk AS
Performance |
| Timeline |
| Edesa Biotech |
| Novo Nordisk AS |
Edesa Biotech and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edesa Biotech and Novo Nordisk
The main advantage of trading using opposite Edesa Biotech and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edesa Biotech 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.| Edesa Biotech vs. Eliem Therapeutics | Edesa Biotech vs. HCW Biologics | Edesa Biotech vs. Scpharmaceuticals | Edesa Biotech vs. Milestone Pharmaceuticals |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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