Correlation Between Novo Nordisk and Precigen
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Precigen 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 Precigen 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 Precigen, you can compare the effects of market volatilities on Novo Nordisk and Precigen 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 Precigen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Precigen.
Diversification Opportunities for Novo Nordisk and Precigen
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novo and Precigen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Precigen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precigen 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 Precigen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precigen has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Precigen go up and down completely randomly.
Pair Corralation between Novo Nordisk and Precigen
Assuming the 90 days trading horizon Novo Nordisk AS is expected to under-perform the Precigen. But the stock apears to be less risky and, when comparing its historical volatility, Novo Nordisk AS is 2.45 times less risky than Precigen. The stock trades about -0.08 of its potential returns per unit of risk. The Precigen is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 77.00 in Precigen on August 30, 2024 and sell it today you would earn a total of 6.00 from holding Precigen or generate 7.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Novo Nordisk AS vs. Precigen
Performance |
| Timeline |
| Novo Nordisk AS |
| Precigen |
Novo Nordisk and Precigen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Precigen
The main advantage of trading using opposite Novo Nordisk and Precigen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Precigen 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 Precigen will offset losses from the drop in Precigen's long position.| Novo Nordisk vs. Singapore Reinsurance | Novo Nordisk vs. United Insurance Holdings | Novo Nordisk vs. The Hanover Insurance | Novo Nordisk vs. QBE Insurance Group |
| Precigen vs. Playtech plc | Precigen vs. KOOL2PLAY SA ZY | Precigen vs. PLAYSTUDIOS A DL 0001 | Precigen vs. COLUMBIA SPORTSWEAR |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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