Correlation Between Valneva SE and ICON PLC
Can any of the company-specific risk be diversified away by investing in both Valneva SE and ICON PLC 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 Valneva SE and ICON PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valneva SE ADR and ICON PLC, you can compare the effects of market volatilities on Valneva SE and ICON PLC 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 Valneva SE with a short position of ICON PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and ICON PLC.
Diversification Opportunities for Valneva SE and ICON PLC
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Valneva and ICON is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and ICON PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON PLC and Valneva SE 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 Valneva SE ADR are associated (or correlated) with ICON PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICON PLC has no effect on the direction of Valneva SE i.e., Valneva SE and ICON PLC go up and down completely randomly.
Pair Corralation between Valneva SE and ICON PLC
Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the ICON PLC. In addition to that, Valneva SE is 1.72 times more volatile than ICON PLC. It trades about -0.05 of its total potential returns per unit of risk. ICON PLC is currently generating about 0.01 per unit of volatility. If you would invest 20,476 in ICON PLC on August 24, 2024 and sell it today you would earn a total of 800.00 from holding ICON PLC or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valneva SE ADR vs. ICON PLC
Performance |
| Timeline |
| Valneva SE ADR |
| ICON PLC |
Valneva SE and ICON PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valneva SE and ICON PLC
The main advantage of trading using opposite Valneva SE and ICON PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE position performs unexpectedly, ICON PLC 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 ICON PLC will offset losses from the drop in ICON PLC's long position.| Valneva SE vs. Lyra Therapeutics | Valneva SE vs. Hookipa Pharma | Valneva SE vs. Cingulate Warrants | Valneva SE vs. SAB Biotherapeutics |
| ICON PLC vs. Mettler Toledo International | ICON PLC vs. Charles River Laboratories | ICON PLC vs. Laboratory of | ICON PLC vs. IQVIA Holdings |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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