Correlation Between Novo Nordisk and Genmab AS
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Genmab AS 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 Genmab AS 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 Genmab AS, you can compare the effects of market volatilities on Novo Nordisk and Genmab AS 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 Genmab AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Genmab AS.
Diversification Opportunities for Novo Nordisk and Genmab AS
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Novo and Genmab is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Genmab AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genmab AS 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 Genmab AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genmab AS has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Genmab AS go up and down completely randomly.
Pair Corralation between Novo Nordisk and Genmab AS
Assuming the 90 days horizon Novo Nordisk AS is expected to under-perform the Genmab AS. But the pink sheet apears to be less risky and, when comparing its historical volatility, Novo Nordisk AS is 1.37 times less risky than Genmab AS. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Genmab AS is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 22,072 in Genmab AS on September 2, 2024 and sell it today you would lose (822.00) from holding Genmab AS or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. Genmab AS
Performance |
| Timeline |
| Novo Nordisk AS |
| Genmab AS |
Novo Nordisk and Genmab AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Genmab AS
The main advantage of trading using opposite Novo Nordisk and Genmab AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Genmab AS 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 Genmab AS will offset losses from the drop in Genmab AS's long position.| Novo Nordisk vs. Rigel Pharmaceuticals | Novo Nordisk vs. Geron | Novo Nordisk vs. Verastem | Novo Nordisk vs. Immutep Ltd ADR |
| Genmab AS vs. Inhibikase Therapeutics | Genmab AS vs. Purple Biotech | Genmab AS vs. Synaptogenix | Genmab AS vs. Legend Biotech Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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