Correlation Between Novo Nordisk and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and ArcelorMittal 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 ArcelorMittal 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 ArcelorMittal SA ADR, you can compare the effects of market volatilities on Novo Nordisk and ArcelorMittal 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 ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and ArcelorMittal.
Diversification Opportunities for Novo Nordisk and ArcelorMittal
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novo and ArcelorMittal is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and ArcelorMittal go up and down completely randomly.
Pair Corralation between Novo Nordisk and ArcelorMittal
Assuming the 90 days horizon Novo Nordisk AS is expected to generate 0.67 times more return on investment than ArcelorMittal. However, Novo Nordisk AS is 1.49 times less risky than ArcelorMittal. It trades about -0.07 of its potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about -0.16 per unit of risk. If you would invest 12,940 in Novo Nordisk AS on January 26, 2024 and sell it today you would lose (260.00) from holding Novo Nordisk AS or give up 2.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Novo Nordisk AS vs. ArcelorMittal SA ADR
Performance |
Timeline |
Novo Nordisk AS |
ArcelorMittal SA ADR |
Novo Nordisk and ArcelorMittal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Novo Nordisk and ArcelorMittal
The main advantage of trading using opposite Novo Nordisk and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.Novo Nordisk vs. Mymetics Corp | Novo Nordisk vs. HUMANA INC | Novo Nordisk vs. Aquagold International | Novo Nordisk vs. Barloworld Ltd ADR |
ArcelorMittal vs. Cleveland Cliffs | ArcelorMittal vs. Reliance Steel Aluminum | ArcelorMittal vs. Ternium SA ADR |
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 CEOs Directory module to screen CEOs from public companies around the world.
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