Correlation Between Novo Nordisk and Jyske Bank
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Jyske Bank 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 Jyske Bank 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 Jyske Bank AS, you can compare the effects of market volatilities on Novo Nordisk and Jyske Bank 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 Jyske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Jyske Bank.
Diversification Opportunities for Novo Nordisk and Jyske Bank
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novo and Jyske is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Jyske Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jyske Bank 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 Jyske Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jyske Bank AS has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Jyske Bank go up and down completely randomly.
Pair Corralation between Novo Nordisk and Jyske Bank
Assuming the 90 days trading horizon Novo Nordisk AS is expected to under-perform the Jyske Bank. In addition to that, Novo Nordisk is 1.72 times more volatile than Jyske Bank AS. It trades about -0.03 of its total potential returns per unit of risk. Jyske Bank AS is currently generating about 0.04 per unit of volatility. If you would invest 50,505 in Jyske Bank AS on December 12, 2024 and sell it today you would earn a total of 7,095 from holding Jyske Bank AS or generate 14.05% 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. Jyske Bank AS
Performance |
| Timeline |
| Novo Nordisk AS |
| Jyske Bank AS |
Novo Nordisk and Jyske Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Jyske Bank
The main advantage of trading using opposite Novo Nordisk and Jyske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Jyske Bank 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 Jyske Bank will offset losses from the drop in Jyske Bank's long position.| Novo Nordisk vs. Vestas Wind Systems | ||
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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