Correlation Between Novo Nordisk and Beam Therapeutics
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Beam Therapeutics 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 Beam Therapeutics 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 Beam Therapeutics, you can compare the effects of market volatilities on Novo Nordisk and Beam Therapeutics 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 Beam Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Beam Therapeutics.
Diversification Opportunities for Novo Nordisk and Beam Therapeutics
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Novo and Beam is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Beam Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beam Therapeutics 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 Beam Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beam Therapeutics has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Beam Therapeutics go up and down completely randomly.
Pair Corralation between Novo Nordisk and Beam Therapeutics
Considering the 90-day investment horizon Novo Nordisk is expected to generate 2.33 times less return on investment than Beam Therapeutics. But when comparing it to its historical volatility, Novo Nordisk AS is 2.46 times less risky than Beam Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Beam Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,368 in Beam Therapeutics on August 27, 2024 and sell it today you would earn a total of 137.00 from holding Beam Therapeutics or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. Beam Therapeutics
Performance |
| Timeline |
| Novo Nordisk AS |
| Beam Therapeutics |
Novo Nordisk and Beam Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Beam Therapeutics
The main advantage of trading using opposite Novo Nordisk and Beam Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Beam Therapeutics 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 Beam Therapeutics will offset losses from the drop in Beam Therapeutics' long position.| Novo Nordisk vs. Regeneron Pharmaceuticals | Novo Nordisk vs. Crispr Therapeutics AG | Novo Nordisk vs. Sarepta Therapeutics | Novo Nordisk vs. Intellia Therapeutics |
| Beam Therapeutics vs. Editas Medicine | Beam Therapeutics vs. Crispr Therapeutics AG | Beam Therapeutics vs. Caribou Biosciences | Beam Therapeutics vs. Verve Therapeutics |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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