Correlation Between Amicus Therapeutics and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both Amicus Therapeutics 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 Amicus Therapeutics and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amicus Therapeutics and Novo Nordisk AS, you can compare the effects of market volatilities on Amicus Therapeutics 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 Amicus Therapeutics with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amicus Therapeutics and Novo Nordisk.
Diversification Opportunities for Amicus Therapeutics and Novo Nordisk
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amicus and Novo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Amicus Therapeutics 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 Amicus Therapeutics 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 Amicus Therapeutics 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 Amicus Therapeutics i.e., Amicus Therapeutics and Novo Nordisk go up and down completely randomly.
Pair Corralation between Amicus Therapeutics and Novo Nordisk
Given the investment horizon of 90 days Amicus Therapeutics is expected to under-perform the Novo Nordisk. But the stock apears to be less risky and, when comparing its historical volatility, Amicus Therapeutics is 1.08 times less risky than Novo Nordisk. The stock trades about -0.14 of its potential returns per unit of risk. The Novo Nordisk AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,909 in Novo Nordisk AS on September 12, 2024 and sell it today you would earn a total of 131.00 from holding Novo Nordisk AS or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amicus Therapeutics vs. Novo Nordisk AS
Performance |
| Timeline |
| Amicus Therapeutics |
| Novo Nordisk AS |
Amicus Therapeutics and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amicus Therapeutics and Novo Nordisk
The main advantage of trading using opposite Amicus Therapeutics and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amicus Therapeutics 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.| Amicus Therapeutics vs. Incyte | Amicus Therapeutics vs. Denali Therapeutics | Amicus Therapeutics vs. argenx NV ADR | Amicus Therapeutics vs. Harmony Biosciences Holdings |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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