Correlation Between Novo Nordisk and HYDROFARM HLD
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and HYDROFARM HLD 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 HYDROFARM HLD 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 HYDROFARM HLD GRP, you can compare the effects of market volatilities on Novo Nordisk and HYDROFARM HLD 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 HYDROFARM HLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and HYDROFARM HLD.
Diversification Opportunities for Novo Nordisk and HYDROFARM HLD
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Novo and HYDROFARM is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and HYDROFARM HLD GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYDROFARM HLD GRP 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 HYDROFARM HLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYDROFARM HLD GRP has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and HYDROFARM HLD go up and down completely randomly.
Pair Corralation between Novo Nordisk and HYDROFARM HLD
Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 0.33 times more return on investment than HYDROFARM HLD. However, Novo Nordisk AS is 3.01 times less risky than HYDROFARM HLD. It trades about 0.07 of its potential returns per unit of risk. HYDROFARM HLD GRP is currently generating about 0.0 per unit of risk. If you would invest 6,115 in Novo Nordisk AS on September 12, 2024 and sell it today you would earn a total of 4,385 from holding Novo Nordisk AS or generate 71.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. HYDROFARM HLD GRP
Performance |
| Timeline |
| Novo Nordisk AS |
| HYDROFARM HLD GRP |
Novo Nordisk and HYDROFARM HLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and HYDROFARM HLD
The main advantage of trading using opposite Novo Nordisk and HYDROFARM HLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, HYDROFARM HLD 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 HYDROFARM HLD will offset losses from the drop in HYDROFARM HLD's long position.| Novo Nordisk vs. Moderna | Novo Nordisk vs. BioNTech SE | Novo Nordisk vs. Superior Plus Corp | Novo Nordisk vs. SIVERS SEMICONDUCTORS AB |
| HYDROFARM HLD vs. AB Volvo | HYDROFARM HLD vs. Daimler Truck Holding | HYDROFARM HLD vs. Superior Plus Corp | HYDROFARM HLD vs. SIVERS SEMICONDUCTORS AB |
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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