Correlation Between NovaBay Pharmaceuticals and ARCA Biopharma
Can any of the company-specific risk be diversified away by investing in both NovaBay Pharmaceuticals and ARCA Biopharma 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 NovaBay Pharmaceuticals and ARCA Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaBay Pharmaceuticals and ARCA Biopharma, you can compare the effects of market volatilities on NovaBay Pharmaceuticals and ARCA Biopharma 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 NovaBay Pharmaceuticals with a short position of ARCA Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaBay Pharmaceuticals and ARCA Biopharma.
Diversification Opportunities for NovaBay Pharmaceuticals and ARCA Biopharma
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NovaBay and ARCA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding NovaBay Pharmaceuticals and ARCA Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCA Biopharma and NovaBay 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 NovaBay Pharmaceuticals are associated (or correlated) with ARCA Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCA Biopharma has no effect on the direction of NovaBay Pharmaceuticals i.e., NovaBay Pharmaceuticals and ARCA Biopharma go up and down completely randomly.
Pair Corralation between NovaBay Pharmaceuticals and ARCA Biopharma
Considering the 90-day investment horizon NovaBay Pharmaceuticals is expected to under-perform the ARCA Biopharma. But the stock apears to be less risky and, when comparing its historical volatility, NovaBay Pharmaceuticals is 1.29 times less risky than ARCA Biopharma. The stock trades about -0.09 of its potential returns per unit of risk. The ARCA Biopharma is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,309 in ARCA Biopharma on August 31, 2024 and sell it today you would lose (1,309) from holding ARCA Biopharma or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 83.16% |
| Values | Daily Returns |
NovaBay Pharmaceuticals vs. ARCA Biopharma
Performance |
| Timeline |
| NovaBay Pharmaceuticals |
| ARCA Biopharma |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NovaBay Pharmaceuticals and ARCA Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaBay Pharmaceuticals and ARCA Biopharma
The main advantage of trading using opposite NovaBay Pharmaceuticals and ARCA Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaBay Pharmaceuticals position performs unexpectedly, ARCA Biopharma 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 ARCA Biopharma will offset losses from the drop in ARCA Biopharma's long position.| NovaBay Pharmaceuticals vs. Immix Biopharma | NovaBay Pharmaceuticals vs. Cns Pharmaceuticals | NovaBay Pharmaceuticals vs. Sonnet Biotherapeutics Holdings | NovaBay Pharmaceuticals vs. ZyVersa Therapeutics |
| ARCA Biopharma vs. Aerovate Therapeutics | ARCA Biopharma vs. Adagene | ARCA Biopharma vs. Acrivon Therapeutics, Common | ARCA Biopharma vs. Rezolute |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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