Correlation Between Nuvalent and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both Nuvalent and FTAI Aviation 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 Nuvalent and FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuvalent and FTAI Aviation Ltd, you can compare the effects of market volatilities on Nuvalent and FTAI Aviation 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 Nuvalent with a short position of FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuvalent and FTAI Aviation.
Diversification Opportunities for Nuvalent and FTAI Aviation
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nuvalent and FTAI is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and Nuvalent 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 Nuvalent are associated (or correlated) with FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of Nuvalent i.e., Nuvalent and FTAI Aviation go up and down completely randomly.
Pair Corralation between Nuvalent and FTAI Aviation
Given the investment horizon of 90 days Nuvalent is expected to generate 5.63 times more return on investment than FTAI Aviation. However, Nuvalent is 5.63 times more volatile than FTAI Aviation Ltd. It trades about 0.07 of its potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.17 per unit of risk. If you would invest 8,513 in Nuvalent on August 30, 2024 and sell it today you would earn a total of 1,163 from holding Nuvalent or generate 13.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuvalent vs. FTAI Aviation Ltd
Performance |
| Timeline |
| Nuvalent |
| FTAI Aviation |
Nuvalent and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuvalent and FTAI Aviation
The main advantage of trading using opposite Nuvalent and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuvalent position performs unexpectedly, FTAI Aviation 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 FTAI Aviation will offset losses from the drop in FTAI Aviation's long position.| Nuvalent vs. Arcellx | Nuvalent vs. Vaxcyte | Nuvalent vs. Viridian Therapeutics | Nuvalent vs. Ventyx Biosciences |
| FTAI Aviation vs. Commonwealth Bank of | FTAI Aviation vs. East Africa Metals | FTAI Aviation vs. Arrow Financial | FTAI Aviation vs. LithiumBank Resources Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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