Correlation Between Novartis and Kering SA
Can any of the company-specific risk be diversified away by investing in both Novartis and Kering SA 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 Kering SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novartis AG and Kering SA, you can compare the effects of market volatilities on Novartis and Kering SA 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 Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novartis and Kering SA.
Diversification Opportunities for Novartis and Kering SA
Weak diversification
The 3 months correlation between Novartis and Kering is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Novartis AG and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Novartis i.e., Novartis and Kering SA go up and down completely randomly.
Pair Corralation between Novartis and Kering SA
Assuming the 90 days trading horizon Novartis AG is expected to generate 0.48 times more return on investment than Kering SA. However, Novartis AG is 2.07 times less risky than Kering SA. It trades about 0.03 of its potential returns per unit of risk. Kering SA is currently generating about -0.09 per unit of risk. If you would invest 8,221 in Novartis AG on September 12, 2024 and sell it today you would earn a total of 655.00 from holding Novartis AG or generate 7.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.81% |
| Values | Daily Returns |
Novartis AG vs. Kering SA
Performance |
| Timeline |
| Novartis AG |
| Kering SA |
Novartis and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novartis and Kering SA
The main advantage of trading using opposite Novartis and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novartis position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.| Novartis vs. Roche Holding AG | Novartis vs. Nestl SA | Novartis vs. Zurich Insurance Group | Novartis vs. Swiss Re AG |
| Kering SA vs. Hermes International SCA | Kering SA vs. LVMH Mot Hennessy | Kering SA vs. LOreal SA | Kering SA vs. Pernod Ricard SA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |