Correlation Between Novo Nordisk and Groenlandsbanken
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Groenlandsbanken 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 Groenlandsbanken 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 Groenlandsbanken AS, you can compare the effects of market volatilities on Novo Nordisk and Groenlandsbanken 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 Groenlandsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Groenlandsbanken.
Diversification Opportunities for Novo Nordisk and Groenlandsbanken
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Novo and Groenlandsbanken is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Groenlandsbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groenlandsbanken 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 Groenlandsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groenlandsbanken has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Groenlandsbanken go up and down completely randomly.
Pair Corralation between Novo Nordisk and Groenlandsbanken
Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 1.71 times more return on investment than Groenlandsbanken. However, Novo Nordisk is 1.71 times more volatile than Groenlandsbanken AS. It trades about 0.06 of its potential returns per unit of risk. Groenlandsbanken AS is currently generating about 0.04 per unit of risk. If you would invest 47,219 in Novo Nordisk AS on September 1, 2024 and sell it today you would earn a total of 28,511 from holding Novo Nordisk AS or generate 60.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. Groenlandsbanken AS
Performance |
| Timeline |
| Novo Nordisk AS |
| Groenlandsbanken |
Novo Nordisk and Groenlandsbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Groenlandsbanken
The main advantage of trading using opposite Novo Nordisk and Groenlandsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Groenlandsbanken 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 Groenlandsbanken will offset losses from the drop in Groenlandsbanken'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 |
| Groenlandsbanken vs. Sydbank AS | Groenlandsbanken vs. Jyske Bank AS | Groenlandsbanken vs. Alm Brand | Groenlandsbanken vs. Nordea Bank Abp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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