Correlation Between SAB Biotherapeutics and Novartis
Can any of the company-specific risk be diversified away by investing in both SAB Biotherapeutics and Novartis 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 SAB Biotherapeutics and Novartis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAB Biotherapeutics and Novartis AG ADR, you can compare the effects of market volatilities on SAB Biotherapeutics and Novartis 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 SAB Biotherapeutics with a short position of Novartis. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAB Biotherapeutics and Novartis.
Diversification Opportunities for SAB Biotherapeutics and Novartis
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SAB and Novartis is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding SAB Biotherapeutics and Novartis AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novartis AG ADR and SAB Biotherapeutics 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 SAB Biotherapeutics are associated (or correlated) with Novartis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novartis AG ADR has no effect on the direction of SAB Biotherapeutics i.e., SAB Biotherapeutics and Novartis go up and down completely randomly.
Pair Corralation between SAB Biotherapeutics and Novartis
Assuming the 90 days horizon SAB Biotherapeutics is expected to generate 19.16 times more return on investment than Novartis. However, SAB Biotherapeutics is 19.16 times more volatile than Novartis AG ADR. It trades about 0.18 of its potential returns per unit of risk. Novartis AG ADR is currently generating about -0.31 per unit of risk. If you would invest 5.01 in SAB Biotherapeutics on August 26, 2024 and sell it today you would earn a total of 2.29 from holding SAB Biotherapeutics or generate 45.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
SAB Biotherapeutics vs. Novartis AG ADR
Performance |
| Timeline |
| SAB Biotherapeutics |
| Novartis AG ADR |
SAB Biotherapeutics and Novartis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAB Biotherapeutics and Novartis
The main advantage of trading using opposite SAB Biotherapeutics and Novartis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAB Biotherapeutics position performs unexpectedly, Novartis 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 Novartis will offset losses from the drop in Novartis' long position.| SAB Biotherapeutics vs. SAB Biotherapeutics | SAB Biotherapeutics vs. Jasper Therapeutics | SAB Biotherapeutics vs. NRx Pharmaceuticals | SAB Biotherapeutics vs. Surrozen Warrant |
| Novartis vs. AstraZeneca PLC ADR | Novartis vs. GlaxoSmithKline PLC ADR | Novartis vs. Roche Holding Ltd | Novartis vs. Bristol Myers Squibb |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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