Correlation Between Novo Nordisk and ONWARD MEDICAL
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and ONWARD MEDICAL 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 ONWARD MEDICAL 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 ONWARD MEDICAL BV, you can compare the effects of market volatilities on Novo Nordisk and ONWARD MEDICAL 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 ONWARD MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and ONWARD MEDICAL.
Diversification Opportunities for Novo Nordisk and ONWARD MEDICAL
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Novo and ONWARD is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and ONWARD MEDICAL BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONWARD MEDICAL BV 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 ONWARD MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONWARD MEDICAL BV has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and ONWARD MEDICAL go up and down completely randomly.
Pair Corralation between Novo Nordisk and ONWARD MEDICAL
Assuming the 90 days trading horizon Novo Nordisk AS is expected to under-perform the ONWARD MEDICAL. In addition to that, Novo Nordisk is 1.56 times more volatile than ONWARD MEDICAL BV. It trades about -0.19 of its total potential returns per unit of risk. ONWARD MEDICAL BV is currently generating about 0.25 per unit of volatility. If you would invest 447.00 in ONWARD MEDICAL BV on September 26, 2024 and sell it today you would earn a total of 77.00 from holding ONWARD MEDICAL BV or generate 17.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. ONWARD MEDICAL BV
Performance |
| Timeline |
| Novo Nordisk AS |
| ONWARD MEDICAL BV |
Novo Nordisk and ONWARD MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and ONWARD MEDICAL
The main advantage of trading using opposite Novo Nordisk and ONWARD MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, ONWARD MEDICAL 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 ONWARD MEDICAL will offset losses from the drop in ONWARD MEDICAL's long position.| Novo Nordisk vs. Mercedes Benz Group AG | Novo Nordisk vs. Vertex Pharmaceuticals Incorporated | Novo Nordisk vs. Moderna | Novo Nordisk vs. WUXI BIOLOGICS UNSPADR2 |
| ONWARD MEDICAL vs. Novo Nordisk AS | ONWARD MEDICAL vs. Mercedes Benz Group AG | ONWARD MEDICAL vs. Vertex Pharmaceuticals Incorporated | ONWARD MEDICAL vs. Moderna |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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