Correlation Between NRG Energy and Chimerix
Can any of the company-specific risk be diversified away by investing in both NRG Energy and Chimerix 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 NRG Energy and Chimerix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and Chimerix, you can compare the effects of market volatilities on NRG Energy and Chimerix 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 NRG Energy with a short position of Chimerix. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and Chimerix.
Diversification Opportunities for NRG Energy and Chimerix
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NRG and Chimerix is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and Chimerix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimerix and NRG Energy 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 NRG Energy are associated (or correlated) with Chimerix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimerix has no effect on the direction of NRG Energy i.e., NRG Energy and Chimerix go up and down completely randomly.
Pair Corralation between NRG Energy and Chimerix
Considering the 90-day investment horizon NRG Energy is expected to generate 0.91 times more return on investment than Chimerix. However, NRG Energy is 1.1 times less risky than Chimerix. It trades about 0.2 of its potential returns per unit of risk. Chimerix is currently generating about -0.12 per unit of risk. If you would invest 8,999 in NRG Energy on September 1, 2024 and sell it today you would earn a total of 1,162 from holding NRG Energy or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRG Energy vs. Chimerix
Performance |
| Timeline |
| NRG Energy |
| Chimerix |
NRG Energy and Chimerix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and Chimerix
The main advantage of trading using opposite NRG Energy and Chimerix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, Chimerix 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 Chimerix will offset losses from the drop in Chimerix's long position.The idea behind NRG Energy and Chimerix 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.| Chimerix vs. Tff Pharmaceuticals | Chimerix vs. Eliem Therapeutics | Chimerix vs. Inhibrx | Chimerix vs. Enliven Therapeutics |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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