Correlation Between Novo Nordisk and RTX AS
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and RTX AS 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 RTX AS 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 RTX AS, you can compare the effects of market volatilities on Novo Nordisk and RTX AS 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 RTX AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and RTX AS.
Diversification Opportunities for Novo Nordisk and RTX AS
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novo and RTX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and RTX AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTX 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 RTX AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTX AS has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and RTX AS go up and down completely randomly.
Pair Corralation between Novo Nordisk and RTX AS
Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 1.96 times more return on investment than RTX AS. However, Novo Nordisk is 1.96 times more volatile than RTX AS. It trades about -0.02 of its potential returns per unit of risk. RTX AS is currently generating about -0.36 per unit of risk. If you would invest 77,060 in Novo Nordisk AS on August 29, 2024 and sell it today you would lose (1,180) from holding Novo Nordisk AS or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. RTX AS
Performance |
| Timeline |
| Novo Nordisk AS |
| RTX AS |
Novo Nordisk and RTX AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and RTX AS
The main advantage of trading using opposite Novo Nordisk and RTX AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, RTX AS 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 RTX AS will offset losses from the drop in RTX AS'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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |