Correlation Between Novo Nordisk and Regeneron Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals, you can compare the effects of market volatilities on Novo Nordisk and Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Regeneron Pharmaceuticals.
Diversification Opportunities for Novo Nordisk and Regeneron Pharmaceuticals
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Novo and Regeneron is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Regeneron Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regeneron Pharmaceuticals has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Regeneron Pharmaceuticals go up and down completely randomly.
Pair Corralation between Novo Nordisk and Regeneron Pharmaceuticals
Considering the 90-day investment horizon Novo Nordisk AS is expected to generate 1.34 times more return on investment than Regeneron Pharmaceuticals. However, Novo Nordisk is 1.34 times more volatile than Regeneron Pharmaceuticals. It trades about -0.08 of its potential returns per unit of risk. Regeneron Pharmaceuticals is currently generating about -0.12 per unit of risk. If you would invest 13,218 in Novo Nordisk AS on August 27, 2024 and sell it today you would lose (2,762) from holding Novo Nordisk AS or give up 20.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. Regeneron Pharmaceuticals
Performance |
| Timeline |
| Novo Nordisk AS |
| Regeneron Pharmaceuticals |
Novo Nordisk and Regeneron Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Regeneron Pharmaceuticals
The main advantage of trading using opposite Novo Nordisk and Regeneron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals will offset losses from the drop in Regeneron Pharmaceuticals' long position.| Novo Nordisk vs. Regeneron Pharmaceuticals | Novo Nordisk vs. Crispr Therapeutics AG | Novo Nordisk vs. Sarepta Therapeutics | Novo Nordisk vs. Intellia Therapeutics |
| Regeneron Pharmaceuticals vs. Crispr Therapeutics AG | Regeneron Pharmaceuticals vs. Novo Nordisk AS | Regeneron Pharmaceuticals vs. Sarepta Therapeutics | Regeneron Pharmaceuticals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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