Correlation Between Novo Nordisk and Innate Pharma
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Innate Pharma 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 Innate Pharma 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 Innate Pharma, you can compare the effects of market volatilities on Novo Nordisk and Innate Pharma 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 Innate Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Innate Pharma.
Diversification Opportunities for Novo Nordisk and Innate Pharma
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novo and Innate is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Innate Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innate Pharma 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 Innate Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innate Pharma has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Innate Pharma go up and down completely randomly.
Pair Corralation between Novo Nordisk and Innate Pharma
Considering the 90-day investment horizon Novo Nordisk AS is expected to generate 0.21 times more return on investment than Innate Pharma. However, Novo Nordisk AS is 4.74 times less risky than Innate Pharma. It trades about -0.15 of its potential returns per unit of risk. Innate Pharma is currently generating about -0.22 per unit of risk. If you would invest 11,236 in Novo Nordisk AS on August 27, 2024 and sell it today you would lose (730.00) from holding Novo Nordisk AS or give up 6.5% 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. Innate Pharma
Performance |
| Timeline |
| Novo Nordisk AS |
| Innate Pharma |
Novo Nordisk and Innate Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Innate Pharma
The main advantage of trading using opposite Novo Nordisk and Innate Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Innate Pharma 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 Innate Pharma will offset losses from the drop in Innate Pharma's long position.| Novo Nordisk vs. Regeneron Pharmaceuticals | Novo Nordisk vs. Crispr Therapeutics AG | Novo Nordisk vs. Sarepta Therapeutics | Novo Nordisk vs. Intellia 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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