Correlation Between Ocean Biomedical and Novavax
Can any of the company-specific risk be diversified away by investing in both Ocean Biomedical and Novavax 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 Ocean Biomedical and Novavax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ocean Biomedical and Novavax, you can compare the effects of market volatilities on Ocean Biomedical and Novavax 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 Ocean Biomedical with a short position of Novavax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocean Biomedical and Novavax.
Diversification Opportunities for Ocean Biomedical and Novavax
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ocean and Novavax is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Biomedical and Novavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novavax and Ocean Biomedical 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 Ocean Biomedical are associated (or correlated) with Novavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novavax has no effect on the direction of Ocean Biomedical i.e., Ocean Biomedical and Novavax go up and down completely randomly.
Pair Corralation between Ocean Biomedical and Novavax
Given the investment horizon of 90 days Ocean Biomedical is expected to under-perform the Novavax. In addition to that, Ocean Biomedical is 1.58 times more volatile than Novavax. It trades about -0.14 of its total potential returns per unit of risk. Novavax is currently generating about 0.04 per unit of volatility. If you would invest 864.00 in Novavax on October 23, 2024 and sell it today you would earn a total of 17.00 from holding Novavax or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ocean Biomedical vs. Novavax
Performance |
| Timeline |
| Ocean Biomedical |
| Novavax |
Ocean Biomedical and Novavax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ocean Biomedical and Novavax
The main advantage of trading using opposite Ocean Biomedical and Novavax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Biomedical position performs unexpectedly, Novavax 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 Novavax will offset losses from the drop in Novavax's long position.| Ocean Biomedical vs. Enveric Biosciences | Ocean Biomedical vs. Hepion Pharmaceuticals | Ocean Biomedical vs. Elevation Oncology | Ocean Biomedical vs. Zura Bio Limited |
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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