Correlation Between Novo Nordisk and Novonesis
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Novonesis 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 Novonesis 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 Novonesis AS, you can compare the effects of market volatilities on Novo Nordisk and Novonesis 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 Novonesis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Novonesis.
Diversification Opportunities for Novo Nordisk and Novonesis
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novo and Novonesis is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Novonesis AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonesis 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 Novonesis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novonesis AS has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Novonesis go up and down completely randomly.
Pair Corralation between Novo Nordisk and Novonesis
Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 1.09 times more return on investment than Novonesis. However, Novo Nordisk is 1.09 times more volatile than Novonesis AS. It trades about -0.05 of its potential returns per unit of risk. Novonesis AS is currently generating about -0.13 per unit of risk. If you would invest 76,880 in Novo Nordisk AS on August 30, 2024 and sell it today you would lose (2,540) from holding Novo Nordisk AS or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Novo Nordisk AS vs. Novonesis AS
Performance |
| Timeline |
| Novo Nordisk AS |
| Novonesis AS |
Novo Nordisk and Novonesis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Novonesis
The main advantage of trading using opposite Novo Nordisk and Novonesis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Novonesis 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 Novonesis will offset losses from the drop in Novonesis' 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 |
| Novonesis vs. North Media AS | Novonesis vs. Hvidbjerg Bank | Novonesis vs. Moens Bank AS | Novonesis vs. NTG Nordic Transport |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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