Correlation Between Novo Nordisk and CSL
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and CSL 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 CSL 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 CSL, you can compare the effects of market volatilities on Novo Nordisk and CSL 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 CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and CSL.
Diversification Opportunities for Novo Nordisk and CSL
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novo and CSL is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and CSL go up and down completely randomly.
Pair Corralation between Novo Nordisk and CSL
Assuming the 90 days horizon Novo Nordisk AS is expected to generate 1.17 times more return on investment than CSL. However, Novo Nordisk is 1.17 times more volatile than CSL. It trades about -0.1 of its potential returns per unit of risk. CSL is currently generating about -0.13 per unit of risk. If you would invest 12,920 in Novo Nordisk AS on January 31, 2024 and sell it today you would lose (370.00) from holding Novo Nordisk AS or give up 2.86% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Novo Nordisk AS vs. CSL
Performance |
Timeline |
Novo Nordisk AS |
CSL |
Novo Nordisk and CSL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Novo Nordisk and CSL
The main advantage of trading using opposite Novo Nordisk and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.Novo Nordisk vs. Novo Nordisk AS | Novo Nordisk vs. Inhibikase TherapeuticsInc | Novo Nordisk vs. Purple Biotech | Novo Nordisk vs. Synaptogenix |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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