Correlation Between Novo Nordisk and North Media
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and North Media 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 North Media 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 North Media AS, you can compare the effects of market volatilities on Novo Nordisk and North Media 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 North Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and North Media.
Diversification Opportunities for Novo Nordisk and North Media
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novo and North is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and North Media AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Media 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 North Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Media AS has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and North Media go up and down completely randomly.
Pair Corralation between Novo Nordisk and North Media
Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 1.02 times more return on investment than North Media. However, Novo Nordisk is 1.02 times more volatile than North Media AS. It trades about 0.03 of its potential returns per unit of risk. North Media AS is currently generating about -0.02 per unit of risk. If you would invest 67,026 in Novo Nordisk AS on August 25, 2024 and sell it today you would earn a total of 8,064 from holding Novo Nordisk AS or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. North Media AS
Performance |
| Timeline |
| Novo Nordisk AS |
| North Media AS |
Novo Nordisk and North Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and North Media
The main advantage of trading using opposite Novo Nordisk and North Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, North Media 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 North Media will offset losses from the drop in North Media'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 |
| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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