Correlation Between Nuvalent and Nike
Can any of the company-specific risk be diversified away by investing in both Nuvalent and Nike 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 Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuvalent and Nike Inc, you can compare the effects of market volatilities on Nuvalent and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuvalent and Nike.
Diversification Opportunities for Nuvalent and Nike
Very weak diversification
The 3 months correlation between Nuvalent and Nike is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Nuvalent i.e., Nuvalent and Nike go up and down completely randomly.
Pair Corralation between Nuvalent and Nike
Given the investment horizon of 90 days Nuvalent is expected to generate 1.09 times more return on investment than Nike. However, Nuvalent is 1.09 times more volatile than Nike Inc. It trades about 0.16 of its potential returns per unit of risk. Nike Inc is currently generating about 0.01 per unit of risk. If you would invest 9,092 in Nuvalent on August 30, 2024 and sell it today you would earn a total of 584.00 from holding Nuvalent or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuvalent vs. Nike Inc
Performance |
| Timeline |
| Nuvalent |
| Nike Inc |
Nuvalent and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuvalent and Nike
The main advantage of trading using opposite Nuvalent and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuvalent position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| Nuvalent vs. Ikena Oncology | Nuvalent vs. Eliem Therapeutics | Nuvalent vs. HCW Biologics | Nuvalent vs. RenovoRx |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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