Correlation Between Novo Nordisk and Editas Medicine
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Editas Medicine 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 Editas Medicine 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 Editas Medicine, you can compare the effects of market volatilities on Novo Nordisk and Editas Medicine 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 Editas Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Editas Medicine.
Diversification Opportunities for Novo Nordisk and Editas Medicine
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Novo and Editas is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Editas Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Editas Medicine 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 Editas Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Editas Medicine has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Editas Medicine go up and down completely randomly.
Pair Corralation between Novo Nordisk and Editas Medicine
Considering the 90-day investment horizon Novo Nordisk AS is expected to generate 0.43 times more return on investment than Editas Medicine. However, Novo Nordisk AS is 2.35 times less risky than Editas Medicine. It trades about 0.06 of its potential returns per unit of risk. Editas Medicine is currently generating about -0.04 per unit of risk. If you would invest 6,339 in Novo Nordisk AS on August 31, 2024 and sell it today you would earn a total of 4,274 from holding Novo Nordisk AS or generate 67.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. Editas Medicine
Performance |
| Timeline |
| Novo Nordisk AS |
| Editas Medicine |
Novo Nordisk and Editas Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Editas Medicine
The main advantage of trading using opposite Novo Nordisk and Editas Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Editas Medicine 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 Editas Medicine will offset losses from the drop in Editas Medicine's long position.| Novo Nordisk vs. Regeneron Pharmaceuticals | Novo Nordisk vs. Crispr Therapeutics AG | Novo Nordisk vs. Sarepta Therapeutics | Novo Nordisk vs. Intellia Therapeutics |
| Editas Medicine vs. Cue Biopharma | Editas Medicine vs. Tff Pharmaceuticals | Editas Medicine vs. Eliem Therapeutics | Editas Medicine vs. Inhibrx |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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