Correlation Between Novartis and Belimo Holding
Can any of the company-specific risk be diversified away by investing in both Novartis and Belimo Holding 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 Novartis and Belimo Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novartis AG and Belimo Holding, you can compare the effects of market volatilities on Novartis and Belimo Holding 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 Novartis with a short position of Belimo Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novartis and Belimo Holding.
Diversification Opportunities for Novartis and Belimo Holding
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Novartis and Belimo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Novartis AG and Belimo Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belimo Holding and Novartis 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 Novartis AG are associated (or correlated) with Belimo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belimo Holding has no effect on the direction of Novartis i.e., Novartis and Belimo Holding go up and down completely randomly.
Pair Corralation between Novartis and Belimo Holding
Assuming the 90 days trading horizon Novartis is expected to generate 1381.5 times less return on investment than Belimo Holding. But when comparing it to its historical volatility, Novartis AG is 1.86 times less risky than Belimo Holding. It trades about 0.0 of its potential returns per unit of risk. Belimo Holding is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 41,940 in Belimo Holding on August 29, 2024 and sell it today you would earn a total of 16,410 from holding Belimo Holding or generate 39.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novartis AG vs. Belimo Holding
Performance |
| Timeline |
| Novartis AG |
| Belimo Holding |
Novartis and Belimo Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novartis and Belimo Holding
The main advantage of trading using opposite Novartis and Belimo Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novartis position performs unexpectedly, Belimo Holding 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 Belimo Holding will offset losses from the drop in Belimo Holding's long position.| Novartis vs. Roche Holding AG | Novartis vs. Nestl SA | Novartis vs. Zurich Insurance Group | Novartis vs. Swiss Re AG |
| Belimo Holding vs. EMS CHEMIE HOLDING AG | Belimo Holding vs. Geberit AG | Belimo Holding vs. VAT Group AG | Belimo Holding vs. Interroll Holding AG |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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