Correlation Between Novo Nordisk and Caribou Biosciences
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Caribou Biosciences 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 Caribou Biosciences 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 Caribou Biosciences, you can compare the effects of market volatilities on Novo Nordisk and Caribou Biosciences 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 Caribou Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Caribou Biosciences.
Diversification Opportunities for Novo Nordisk and Caribou Biosciences
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novo and Caribou is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Caribou Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribou Biosciences 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 Caribou Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribou Biosciences has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Caribou Biosciences go up and down completely randomly.
Pair Corralation between Novo Nordisk and Caribou Biosciences
Considering the 90-day investment horizon Novo Nordisk AS is expected to generate 0.44 times more return on investment than Caribou Biosciences. However, Novo Nordisk AS is 2.26 times less risky than Caribou Biosciences. It trades about -0.03 of its potential returns per unit of risk. Caribou Biosciences is currently generating about -0.07 per unit of risk. If you would invest 9,047 in Novo Nordisk AS on January 10, 2025 and sell it today you would lose (2,926) from holding Novo Nordisk AS or give up 32.34% 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. Caribou Biosciences
Performance |
| Timeline |
| Novo Nordisk AS |
| Caribou Biosciences |
Novo Nordisk and Caribou Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Caribou Biosciences
The main advantage of trading using opposite Novo Nordisk and Caribou Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Caribou Biosciences 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 Caribou Biosciences will offset losses from the drop in Caribou Biosciences' long position.| Novo Nordisk vs. Regeneron Pharmaceuticals | Novo Nordisk vs. Crispr Therapeutics AG | Novo Nordisk vs. Sarepta Therapeutics | Novo Nordisk vs. Intellia Therapeutics |
| Caribou Biosciences vs. Intellia Therapeutics | Caribou Biosciences vs. Editas Medicine | Caribou Biosciences vs. Crispr Therapeutics AG | Caribou Biosciences 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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