Correlation Between Novo Nordisk and Opthea
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Opthea 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 Novo Nordisk and Opthea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novo Nordisk AS and Opthea, you can compare the effects of market volatilities on Novo Nordisk and Opthea 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 Novo Nordisk with a short position of Opthea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Opthea.
Diversification Opportunities for Novo Nordisk and Opthea
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Novo and Opthea is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Opthea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opthea and Novo Nordisk 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 Novo Nordisk AS are associated (or correlated) with Opthea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opthea has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Opthea go up and down completely randomly.
Pair Corralation between Novo Nordisk and Opthea
Assuming the 90 days horizon Novo Nordisk AS is expected to generate 0.42 times more return on investment than Opthea. However, Novo Nordisk AS is 2.36 times less risky than Opthea. It trades about 0.06 of its potential returns per unit of risk. Opthea is currently generating about -0.01 per unit of risk. If you would invest 6,495 in Novo Nordisk AS on September 3, 2024 and sell it today you would earn a total of 4,188 from holding Novo Nordisk AS or generate 64.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. Opthea
Performance |
| Timeline |
| Novo Nordisk AS |
| Opthea |
Novo Nordisk and Opthea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Opthea
The main advantage of trading using opposite Novo Nordisk and Opthea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Opthea 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 Opthea will offset losses from the drop in Opthea's long position.| Novo Nordisk vs. Nuvalent | Novo Nordisk vs. Arcellx | Novo Nordisk vs. Vaxcyte | Novo Nordisk vs. Viridian Therapeutics |
| Opthea vs. Here Media | Opthea vs. Playtika Holding Corp | Opthea vs. Playtech plc | Opthea vs. Modine Manufacturing |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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