Correlation Between CSL and Novavax
Can any of the company-specific risk be diversified away by investing in both CSL and Novavax 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 CSL and Novavax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL Limited and Novavax, you can compare the effects of market volatilities on CSL and Novavax 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 CSL with a short position of Novavax. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Novavax.
Diversification Opportunities for CSL and Novavax
Very weak diversification
The 3 months correlation between CSL and Novavax is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CSL Limited and Novavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novavax and CSL 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 CSL Limited are associated (or correlated) with Novavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novavax has no effect on the direction of CSL i.e., CSL and Novavax go up and down completely randomly.
Pair Corralation between CSL and Novavax
Assuming the 90 days horizon CSL Limited is expected to generate 0.2 times more return on investment than Novavax. However, CSL Limited is 5.13 times less risky than Novavax. It trades about 0.0 of its potential returns per unit of risk. Novavax is currently generating about -0.03 per unit of risk. If you would invest 16,943 in CSL Limited on August 25, 2024 and sell it today you would lose (147.00) from holding CSL Limited or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
CSL Limited vs. Novavax
Performance |
| Timeline |
| CSL Limited |
| Novavax |
CSL and Novavax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Novavax
The main advantage of trading using opposite CSL and Novavax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Novavax 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 Novavax will offset losses from the drop in Novavax's long position.| CSL vs. United Breweries Co | CSL vs. Monster Beverage Corp | CSL vs. Columbia Sportswear | CSL vs. COLUMBIA SPORTSWEAR |
| Novavax vs. CSL Limited | Novavax vs. Superior Plus Corp | Novavax vs. NMI Holdings | Novavax vs. Origin Agritech |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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