Correlation Between Novavax and Vaxart
Can any of the company-specific risk be diversified away by investing in both Novavax and Vaxart 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 Vaxart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novavax and Vaxart Inc, you can compare the effects of market volatilities on Novavax and Vaxart 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 Vaxart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novavax and Vaxart.
Diversification Opportunities for Novavax and Vaxart
Poor diversification
The 3 months correlation between Novavax and Vaxart is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Novavax and Vaxart Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaxart 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 Vaxart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaxart Inc has no effect on the direction of Novavax i.e., Novavax and Vaxart go up and down completely randomly.
Pair Corralation between Novavax and Vaxart
Given the investment horizon of 90 days Novavax is expected to generate 1.36 times more return on investment than Vaxart. However, Novavax is 1.36 times more volatile than Vaxart Inc. It trades about 0.01 of its potential returns per unit of risk. Vaxart Inc is currently generating about 0.0 per unit of risk. If you would invest 1,761 in Novavax on August 26, 2024 and sell it today you would lose (914.00) from holding Novavax or give up 51.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novavax vs. Vaxart Inc
Performance |
| Timeline |
| Novavax |
| Vaxart Inc |
Novavax and Vaxart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novavax and Vaxart
The main advantage of trading using opposite Novavax and Vaxart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novavax position performs unexpectedly, Vaxart 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 Vaxart will offset losses from the drop in Vaxart's long position.The idea behind Novavax and Vaxart 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.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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