Correlation Between Novo Nordisk and GB Sciences
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and GB Sciences 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 GB Sciences 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 GB Sciences, you can compare the effects of market volatilities on Novo Nordisk and GB Sciences 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 GB Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and GB Sciences.
Diversification Opportunities for Novo Nordisk and GB Sciences
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Novo and GBLX is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and GB Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GB Sciences 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 GB Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GB Sciences has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and GB Sciences go up and down completely randomly.
Pair Corralation between Novo Nordisk and GB Sciences
Assuming the 90 days horizon Novo Nordisk is expected to generate 73.12 times less return on investment than GB Sciences. But when comparing it to its historical volatility, Novo Nordisk AS is 27.49 times less risky than GB Sciences. It trades about 0.03 of its potential returns per unit of risk. GB Sciences is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.92 in GB Sciences on December 4, 2024 and sell it today you would lose (1.89) from holding GB Sciences or give up 98.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
Novo Nordisk AS vs. GB Sciences
Performance |
Timeline |
Novo Nordisk AS |
GB Sciences |
Novo Nordisk and GB Sciences Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Novo Nordisk and GB Sciences
The main advantage of trading using opposite Novo Nordisk and GB Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, GB Sciences 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 GB Sciences will offset losses from the drop in GB Sciences' long position.Novo Nordisk vs. Nuvalent | Novo Nordisk vs. Arcellx | Novo Nordisk vs. Vaxcyte | Novo Nordisk vs. Viridian Therapeutics |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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