Correlation Between Novo Nordisk and GN Store
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and GN Store 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 GN Store 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 GN Store Nord, you can compare the effects of market volatilities on Novo Nordisk and GN Store 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 GN Store. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and GN Store.
Diversification Opportunities for Novo Nordisk and GN Store
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Novo and GN Store is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and GN Store Nord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GN Store Nord 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 GN Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GN Store Nord has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and GN Store go up and down completely randomly.
Pair Corralation between Novo Nordisk and GN Store
Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 0.99 times more return on investment than GN Store. However, Novo Nordisk AS is 1.01 times less risky than GN Store. It trades about 0.02 of its potential returns per unit of risk. GN Store Nord is currently generating about -0.01 per unit of risk. If you would invest 75,260 in Novo Nordisk AS on September 3, 2024 and sell it today you would earn a total of 470.00 from holding Novo Nordisk AS or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. GN Store Nord
Performance |
| Timeline |
| Novo Nordisk AS |
| GN Store Nord |
Novo Nordisk and GN Store Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and GN Store
The main advantage of trading using opposite Novo Nordisk and GN Store positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, GN Store 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 GN Store will offset losses from the drop in GN Store'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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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