Correlation Between Zendesk and Novartis

Can any of the company-specific risk be diversified away by investing in both Zendesk and Novartis 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 Zendesk and Novartis into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zendesk and Novartis AG ADR, you can compare the effects of market volatilities on Zendesk and Novartis 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 Zendesk with a short position of Novartis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zendesk and Novartis.

Diversification Opportunities for Zendesk and Novartis

0.12

Correlation Coefficient

Zendesk  Novartis

Average diversification

The 3 months correlation between Zendesk and Novartis is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Zendesk and Novartis AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novartis AG ADR and Zendesk 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 Zendesk are associated (or correlated) with Novartis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novartis AG ADR has no effect on the direction of Zendesk i.e., Zendesk and Novartis go up and down completely randomly.

Pair Corralation between Zendesk and Novartis

If you would invest  9,527  in Novartis AG ADR on January 26, 2024 and sell it today you would earn a total of  308.00  from holding Novartis AG ADR or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Zendesk  vs.  Novartis AG ADR

Zendesk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zendesk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Zendesk is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Novartis AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novartis AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Novartis is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zendesk and Novartis

The main advantage of trading using opposite Zendesk and Novartis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zendesk position performs unexpectedly, Novartis 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 Novartis will offset losses from the drop in Novartis' long position.

The idea behind Zendesk and Novartis AG ADR 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.