Correlation Between Valneva SE and SpringWorks Therapeutics
Can any of the company-specific risk be diversified away by investing in both Valneva SE and SpringWorks Therapeutics 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 SpringWorks Therapeutics 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 SpringWorks Therapeutics, you can compare the effects of market volatilities on Valneva SE and SpringWorks Therapeutics 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 SpringWorks Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and SpringWorks Therapeutics.
Diversification Opportunities for Valneva SE and SpringWorks Therapeutics
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Valneva and SpringWorks is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and SpringWorks Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpringWorks Therapeutics 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 SpringWorks Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpringWorks Therapeutics has no effect on the direction of Valneva SE i.e., Valneva SE and SpringWorks Therapeutics go up and down completely randomly.
Pair Corralation between Valneva SE and SpringWorks Therapeutics
Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the SpringWorks Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.13 times less risky than SpringWorks Therapeutics. The stock trades about -0.09 of its potential returns per unit of risk. The SpringWorks Therapeutics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,661 in SpringWorks Therapeutics on August 28, 2024 and sell it today you would earn a total of 1,278 from holding SpringWorks Therapeutics or generate 48.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valneva SE ADR vs. SpringWorks Therapeutics
Performance |
| Timeline |
| Valneva SE ADR |
| SpringWorks Therapeutics |
Valneva SE and SpringWorks Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valneva SE and SpringWorks Therapeutics
The main advantage of trading using opposite Valneva SE and SpringWorks Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE position performs unexpectedly, SpringWorks Therapeutics 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 SpringWorks Therapeutics will offset losses from the drop in SpringWorks Therapeutics' long position.| Valneva SE vs. Eliem Therapeutics | Valneva SE vs. HCW Biologics | Valneva SE vs. Scpharmaceuticals | Valneva SE vs. Milestone Pharmaceuticals |
| SpringWorks Therapeutics vs. Relay Therapeutics | SpringWorks Therapeutics vs. Stoke Therapeutics | SpringWorks Therapeutics vs. Pliant Therapeutics | SpringWorks Therapeutics vs. Black Diamond Therapeutics |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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