Correlation Between Magenta Therapeutics and Nuvation Bio
Can any of the company-specific risk be diversified away by investing in both Magenta Therapeutics and Nuvation Bio 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 Magenta Therapeutics and Nuvation Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magenta Therapeutics and Nuvation Bio, you can compare the effects of market volatilities on Magenta Therapeutics and Nuvation Bio 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 Magenta Therapeutics with a short position of Nuvation Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magenta Therapeutics and Nuvation Bio.
Diversification Opportunities for Magenta Therapeutics and Nuvation Bio
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Magenta and Nuvation is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Magenta Therapeutics and Nuvation Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvation Bio and Magenta Therapeutics 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 Magenta Therapeutics are associated (or correlated) with Nuvation Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvation Bio has no effect on the direction of Magenta Therapeutics i.e., Magenta Therapeutics and Nuvation Bio go up and down completely randomly.
Pair Corralation between Magenta Therapeutics and Nuvation Bio
Given the investment horizon of 90 days Magenta Therapeutics is expected to generate 6.29 times less return on investment than Nuvation Bio. But when comparing it to its historical volatility, Magenta Therapeutics is 1.46 times less risky than Nuvation Bio. It trades about 0.01 of its potential returns per unit of risk. Nuvation Bio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 216.00 in Nuvation Bio on November 2, 2024 and sell it today you would earn a total of 17.00 from holding Nuvation Bio or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 22.67% |
| Values | Daily Returns |
Magenta Therapeutics vs. Nuvation Bio
Performance |
| Timeline |
| Magenta Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nuvation Bio |
Magenta Therapeutics and Nuvation Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magenta Therapeutics and Nuvation Bio
The main advantage of trading using opposite Magenta Therapeutics and Nuvation Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magenta Therapeutics position performs unexpectedly, Nuvation Bio 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 Nuvation Bio will offset losses from the drop in Nuvation Bio's long position.| Magenta Therapeutics vs. Assembly Biosciences | Magenta Therapeutics vs. Instil Bio | Magenta Therapeutics vs. Nuvation Bio | Magenta Therapeutics vs. Achilles Therapeutics PLC |
| Nuvation Bio vs. Assembly Biosciences | Nuvation Bio vs. Instil Bio | Nuvation Bio vs. Achilles Therapeutics PLC | Nuvation Bio vs. NextCure |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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