Correlation Between Horizon Pharma and Novartis
Can any of the company-specific risk be diversified away by investing in both Horizon Pharma and Novartis 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 Horizon Pharma and Novartis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Pharma PLC and Novartis AG ADR, you can compare the effects of market volatilities on Horizon Pharma and Novartis 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 Horizon Pharma with a short position of Novartis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Pharma and Novartis.
Diversification Opportunities for Horizon Pharma and Novartis
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Horizon and Novartis is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Pharma PLC and Novartis AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novartis AG ADR and Horizon Pharma 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 Horizon Pharma PLC are associated (or correlated) with Novartis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novartis AG ADR has no effect on the direction of Horizon Pharma i.e., Horizon Pharma and Novartis go up and down completely randomly.
Pair Corralation between Horizon Pharma and Novartis
If you would invest 9,031 in Novartis AG ADR on August 25, 2024 and sell it today you would earn a total of 1,397 from holding Novartis AG ADR or generate 15.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.37% |
| Values | Daily Returns |
Horizon Pharma PLC vs. Novartis AG ADR
Performance |
| Timeline |
| Horizon Pharma PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Novartis AG ADR |
Horizon Pharma and Novartis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Pharma and Novartis
The main advantage of trading using opposite Horizon Pharma and Novartis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Pharma position performs unexpectedly, Novartis 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 Novartis will offset losses from the drop in Novartis' long position.| Horizon Pharma vs. Bristol Myers Squibb | Horizon Pharma vs. AbbVie Inc | Horizon Pharma vs. Merck Company | Horizon Pharma vs. Gilead Sciences |
| Novartis vs. AstraZeneca PLC ADR | Novartis vs. GlaxoSmithKline PLC ADR | Novartis vs. Roche Holding Ltd | Novartis vs. Bristol Myers Squibb |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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