Correlation Between Novo Nordisk and Alm Brand
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Alm Brand 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 Alm Brand 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 Alm Brand, you can compare the effects of market volatilities on Novo Nordisk and Alm Brand 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 Alm Brand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Alm Brand.
Diversification Opportunities for Novo Nordisk and Alm Brand
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Novo and Alm is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Alm Brand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alm Brand 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 Alm Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alm Brand has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Alm Brand go up and down completely randomly.
Pair Corralation between Novo Nordisk and Alm Brand
Assuming the 90 days trading horizon Novo Nordisk is expected to generate 2.19 times less return on investment than Alm Brand. In addition to that, Novo Nordisk is 1.3 times more volatile than Alm Brand. It trades about 0.03 of its total potential returns per unit of risk. Alm Brand is currently generating about 0.08 per unit of volatility. If you would invest 1,047 in Alm Brand on September 1, 2024 and sell it today you would earn a total of 320.00 from holding Alm Brand or generate 30.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. Alm Brand
Performance |
| Timeline |
| Novo Nordisk AS |
| Alm Brand |
Novo Nordisk and Alm Brand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Alm Brand
The main advantage of trading using opposite Novo Nordisk and Alm Brand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Alm Brand 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 Alm Brand will offset losses from the drop in Alm Brand's long position.| Novo Nordisk vs. Vestas Wind Systems | Novo Nordisk vs. Danske Bank AS | Novo Nordisk vs. Bavarian Nordic | Novo Nordisk vs. DSV Panalpina AS |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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