Correlation Between Novavax and Biovie
Can any of the company-specific risk be diversified away by investing in both Novavax and Biovie 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 Novavax and Biovie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novavax and Biovie Inc, you can compare the effects of market volatilities on Novavax and Biovie 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 Novavax with a short position of Biovie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novavax and Biovie.
Diversification Opportunities for Novavax and Biovie
Excellent diversification
The 3 months correlation between Novavax and Biovie is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Novavax and Biovie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biovie Inc and Novavax 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 Novavax are associated (or correlated) with Biovie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biovie Inc has no effect on the direction of Novavax i.e., Novavax and Biovie go up and down completely randomly.
Pair Corralation between Novavax and Biovie
Given the investment horizon of 90 days Novavax is expected to under-perform the Biovie. But the stock apears to be less risky and, when comparing its historical volatility, Novavax is 1.59 times less risky than Biovie. The stock trades about -0.14 of its potential returns per unit of risk. The Biovie Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 286.00 in Biovie Inc on August 26, 2024 and sell it today you would earn a total of 19.00 from holding Biovie Inc or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novavax vs. Biovie Inc
Performance |
| Timeline |
| Novavax |
| Biovie Inc |
Novavax and Biovie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novavax and Biovie
The main advantage of trading using opposite Novavax and Biovie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novavax position performs unexpectedly, Biovie 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 Biovie will offset losses from the drop in Biovie's long position.The idea behind Novavax and Biovie Inc 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.| Biovie vs. Inozyme Pharma | Biovie vs. Day One Biopharmaceuticals | Biovie vs. Terns Pharmaceuticals | Biovie vs. Eledon Pharmaceuticals |
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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