Correlation Between NYSE Composite and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Novo Nordisk 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 NYSE Composite and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Novo Nordisk AS, you can compare the effects of market volatilities on NYSE Composite and Novo Nordisk 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 NYSE Composite with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Novo Nordisk.
Diversification Opportunities for NYSE Composite and Novo Nordisk
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Novo is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Novo Nordisk AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novo Nordisk AS and NYSE Composite 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 NYSE Composite are associated (or correlated) with Novo Nordisk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novo Nordisk AS has no effect on the direction of NYSE Composite i.e., NYSE Composite and Novo Nordisk go up and down completely randomly.
Pair Corralation between NYSE Composite and Novo Nordisk
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.34 times more return on investment than Novo Nordisk. However, NYSE Composite is 2.92 times less risky than Novo Nordisk. It trades about 0.12 of its potential returns per unit of risk. Novo Nordisk AS is currently generating about -0.23 per unit of risk. If you would invest 1,929,223 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 91,759 from holding NYSE Composite or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Novo Nordisk AS
Performance |
| Timeline |
NYSE Composite and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Novo Nordisk AS
Pair trading matchups for Novo Nordisk
Pair Trading with NYSE Composite and Novo Nordisk
The main advantage of trading using opposite NYSE Composite and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Novo Nordisk 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 Novo Nordisk will offset losses from the drop in Novo Nordisk's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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