Correlation Between Dupont De and Nuvation Bio

Can any of the company-specific risk be diversified away by investing in both Dupont De and Nuvation Bio 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 Dupont De and Nuvation Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dupont De Nemours and Nuvation Bio, you can compare the effects of market volatilities on Dupont De and Nuvation Bio 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 Dupont De with a short position of Nuvation Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Nuvation Bio.

Diversification Opportunities for Dupont De and Nuvation Bio

-0.63

Correlation Coefficient

Dupont De  Nuvation Bio

Excellent diversification

The 3 months correlation between Dupont and Nuvation is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Nuvation Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvation Bio and Dupont De 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 Dupont De Nemours are associated (or correlated) with Nuvation Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvation Bio has no effect on the direction of Dupont De i.e., Dupont De and Nuvation Bio go up and down completely randomly.

Pair Corralation between Dupont De and Nuvation Bio

Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.27 times less return on investment than Nuvation Bio. But when comparing it to its historical volatility, Dupont De Nemours is 2.83 times less risky than Nuvation Bio. It trades about 0.06 of its potential returns per unit of risk. Nuvation Bio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  214.00  in Nuvation Bio on July 25, 2024 and sell it today you would earn a total of  19.00  from holding Nuvation Bio or generate 8.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Nuvation Bio

Dupont De Nemours

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Dupont De may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Nuvation Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvation Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dupont De and Nuvation Bio

The main advantage of trading using opposite Dupont De and Nuvation Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Nuvation Bio 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 Nuvation Bio will offset losses from the drop in Nuvation Bio's long position.

The idea behind Dupont De Nemours and Nuvation Bio pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.