Correlation Between Incyte and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both Incyte 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 Incyte and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Incyte and Novo Nordisk AS, you can compare the effects of market volatilities on Incyte 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 Incyte with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incyte and Novo Nordisk.
Diversification Opportunities for Incyte and Novo Nordisk
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Incyte and Novo is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Incyte 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 Incyte 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 Incyte 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 Incyte i.e., Incyte and Novo Nordisk go up and down completely randomly.
Pair Corralation between Incyte and Novo Nordisk
Given the investment horizon of 90 days Incyte is expected to generate 0.49 times more return on investment than Novo Nordisk. However, Incyte is 2.03 times less risky than Novo Nordisk. It trades about 0.24 of its potential returns per unit of risk. Novo Nordisk AS is currently generating about -0.03 per unit of risk. If you would invest 6,907 in Incyte on November 1, 2024 and sell it today you would earn a total of 465.00 from holding Incyte or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Incyte vs. Novo Nordisk AS
Performance |
| Timeline |
| Incyte |
| Novo Nordisk AS |
Incyte and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Incyte and Novo Nordisk
The main advantage of trading using opposite Incyte and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incyte 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.| Incyte vs. Alnylam Pharmaceuticals | Incyte vs. United Therapeutics | Incyte vs. Ultragenyx | Incyte vs. Apellis 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |