Correlation Between Valneva SE and NovaBay Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Valneva SE and NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals, you can compare the effects of market volatilities on Valneva SE and NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and NovaBay Pharmaceuticals.
Diversification Opportunities for Valneva SE and NovaBay Pharmaceuticals
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Valneva and NovaBay is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and NovaBay Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NovaBay Pharmaceuticals has no effect on the direction of Valneva SE i.e., Valneva SE and NovaBay Pharmaceuticals go up and down completely randomly.
Pair Corralation between Valneva SE and NovaBay Pharmaceuticals
Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the NovaBay Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 2.28 times less risky than NovaBay Pharmaceuticals. The stock trades about -0.62 of its potential returns per unit of risk. The NovaBay Pharmaceuticals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 55.00 in NovaBay Pharmaceuticals on August 29, 2024 and sell it today you would earn a total of 6.00 from holding NovaBay Pharmaceuticals or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valneva SE ADR vs. NovaBay Pharmaceuticals
Performance |
| Timeline |
| Valneva SE ADR |
| NovaBay Pharmaceuticals |
Valneva SE and NovaBay Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valneva SE and NovaBay Pharmaceuticals
The main advantage of trading using opposite Valneva SE and NovaBay Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE position performs unexpectedly, NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals will offset losses from the drop in NovaBay Pharmaceuticals' long position.| Valneva SE vs. Bright Minds Biosciences | Valneva SE vs. HP Inc | Valneva SE vs. Intel | Valneva SE vs. Chevron Corp |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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