Correlation Between Uber Technologies and Novo Nordisk

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Can any of the company-specific risk be diversified away by investing in both Uber Technologies 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 Uber Technologies and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Novo Nordisk AS, you can compare the effects of market volatilities on Uber Technologies 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 Uber Technologies with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Novo Nordisk.

Diversification Opportunities for Uber Technologies and Novo Nordisk

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between Uber Technologies and NONOF is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies 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 Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Novo Nordisk go up and down completely randomly.

Pair Corralation between Uber Technologies and Novo Nordisk

Given the investment horizon of 90 days Uber Technologies is expected to generate 1.45 times less return on investment than Novo Nordisk. In addition to that, Uber Technologies is 2.65 times more volatile than Novo Nordisk AS. It trades about 0.12 of its total potential returns per unit of risk. Novo Nordisk AS is currently generating about 0.45 per unit of volatility. If you would invest  10,616  in Novo Nordisk AS on September 1, 2022 and sell it today you would earn a total of  1,821  from holding Novo Nordisk AS or generate 17.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Uber Technologies  vs.  Novo Nordisk AS

 Performance (%) 
       Timeline  
Uber Technologies 
Uber Technologies Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Uber Technologies is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

Uber Technologies Price Channel

Novo Nordisk AS 
NONOF Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Novo Nordisk AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Novo Nordisk exhibited solid returns over the last few months and may actually be approaching a breakup point.

NONOF Price Channel

Uber Technologies and Novo Nordisk Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Uber Technologies and Novo Nordisk

The main advantage of trading using opposite Uber Technologies and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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.
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The idea behind Uber Technologies and Novo Nordisk AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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