Correlation Between Eledon Pharmaceuticals and Novartis
Can any of the company-specific risk be diversified away by investing in both Eledon Pharmaceuticals 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 Eledon Pharmaceuticals and Novartis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eledon Pharmaceuticals and Novartis AG ADR, you can compare the effects of market volatilities on Eledon Pharmaceuticals 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 Eledon Pharmaceuticals with a short position of Novartis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eledon Pharmaceuticals and Novartis.
Diversification Opportunities for Eledon Pharmaceuticals and Novartis
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eledon and Novartis is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Eledon Pharmaceuticals 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 Eledon Pharmaceuticals 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 Eledon Pharmaceuticals 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 Eledon Pharmaceuticals i.e., Eledon Pharmaceuticals and Novartis go up and down completely randomly.
Pair Corralation between Eledon Pharmaceuticals and Novartis
Given the investment horizon of 90 days Eledon Pharmaceuticals is expected to generate 5.3 times more return on investment than Novartis. However, Eledon Pharmaceuticals is 5.3 times more volatile than Novartis AG ADR. It trades about 0.15 of its potential returns per unit of risk. Novartis AG ADR is currently generating about -0.31 per unit of risk. If you would invest 339.00 in Eledon Pharmaceuticals on August 26, 2024 and sell it today you would earn a total of 62.00 from holding Eledon Pharmaceuticals or generate 18.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eledon Pharmaceuticals vs. Novartis AG ADR
Performance |
| Timeline |
| Eledon Pharmaceuticals |
| Novartis AG ADR |
Eledon Pharmaceuticals and Novartis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eledon Pharmaceuticals and Novartis
The main advantage of trading using opposite Eledon Pharmaceuticals and Novartis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eledon Pharmaceuticals 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.| Eledon Pharmaceuticals vs. Inozyme Pharma | Eledon Pharmaceuticals vs. Day One Biopharmaceuticals | Eledon Pharmaceuticals vs. Terns Pharmaceuticals | Eledon Pharmaceuticals vs. Hookipa Pharma |
| Novartis vs. AstraZeneca PLC ADR | Novartis vs. GlaxoSmithKline PLC ADR | Novartis vs. Roche Holding Ltd | Novartis vs. Bristol Myers Squibb |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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