Correlation Between Genmab AS and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both Genmab AS 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 Genmab AS and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genmab AS and Novo Nordisk AS, you can compare the effects of market volatilities on Genmab AS 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 Genmab AS with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genmab AS and Novo Nordisk.
Diversification Opportunities for Genmab AS and Novo Nordisk
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Genmab and Novo is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Genmab 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 Genmab AS 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 Genmab 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 Genmab AS i.e., Genmab AS and Novo Nordisk go up and down completely randomly.
Pair Corralation between Genmab AS and Novo Nordisk
Assuming the 90 days trading horizon Genmab AS is expected to under-perform the Novo Nordisk. But the stock apears to be less risky and, when comparing its historical volatility, Genmab AS is 1.07 times less risky than Novo Nordisk. The stock trades about -0.08 of its potential returns per unit of risk. The Novo Nordisk AS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 43,977 in Novo Nordisk AS on August 24, 2024 and sell it today you would earn a total of 31,113 from holding Novo Nordisk AS or generate 70.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genmab AS vs. Novo Nordisk AS
Performance |
| Timeline |
| Genmab AS |
| Novo Nordisk AS |
Genmab AS and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genmab AS and Novo Nordisk
The main advantage of trading using opposite Genmab AS and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genmab AS 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.| Genmab AS vs. Ambu AS | Genmab AS vs. DSV Panalpina AS | Genmab AS vs. Bavarian Nordic | Genmab AS vs. GN Store Nord |
| Novo Nordisk vs. Vestas Wind Systems | Novo Nordisk vs. Danske Bank AS | Novo Nordisk vs. Bavarian Nordic | Novo Nordisk vs. DSV Panalpina AS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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