Correlation Between Novo Nordisk and Genmab AS
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Genmab AS 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 Genmab AS 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 Genmab AS, you can compare the effects of market volatilities on Novo Nordisk and Genmab AS 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 Genmab AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Genmab AS.
Diversification Opportunities for Novo Nordisk and Genmab AS
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Novo and Genmab is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Genmab AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genmab AS 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 Genmab AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genmab AS has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Genmab AS go up and down completely randomly.
Pair Corralation between Novo Nordisk and Genmab AS
Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 1.07 times more return on investment than Genmab AS. However, Novo Nordisk is 1.07 times more volatile than Genmab AS. It trades about 0.07 of its potential returns per unit of risk. Genmab AS is currently generating about -0.08 per unit of risk. If you would invest 43,977 in Novo Nordisk AS on August 24, 2024 and sell it today you would earn a total of 31,113 from holding Novo Nordisk AS or generate 70.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. Genmab AS
Performance |
| Timeline |
| Novo Nordisk AS |
| Genmab AS |
Novo Nordisk and Genmab AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Genmab AS
The main advantage of trading using opposite Novo Nordisk and Genmab AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Genmab AS 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 Genmab AS will offset losses from the drop in Genmab AS'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 |
| Genmab AS vs. Ambu AS | Genmab AS vs. DSV Panalpina AS | Genmab AS vs. Bavarian Nordic | Genmab AS vs. GN Store Nord |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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