Correlation Between Nuvalent and Clearside Biomedical

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

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

Diversification Opportunities for Nuvalent and Clearside Biomedical

-0.46

Correlation Coefficient

Nuvalent  Clearside Biomedical

Very good diversification

The 3 months correlation between Nuvalent and Clearside is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Clearside Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearside Biomedical and Nuvalent 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 Nuvalent are associated (or correlated) with Clearside Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearside Biomedical has no effect on the direction of Nuvalent i.e., Nuvalent and Clearside Biomedical go up and down completely randomly.

Pair Corralation between Nuvalent and Clearside Biomedical

Given the investment horizon of 90 days Nuvalent is expected to generate 0.22 times more return on investment than Clearside Biomedical. However, Nuvalent is 4.62 times less risky than Clearside Biomedical. It trades about 0.1 of its potential returns per unit of risk. Clearside Biomedical is currently generating about -0.07 per unit of risk. If you would invest  6,819  in Nuvalent on May 6, 2025 and sell it today you would earn a total of  957.00  from holding Nuvalent or generate 14.03% return on investment over 90 days.

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

Nuvalent  vs.  Clearside Biomedical

Nuvalent

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvalent are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Nuvalent disclosed solid returns over the last few months and may actually be approaching a breakup point.

Clearside Biomedical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearside Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Nuvalent and Clearside Biomedical

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

The idea behind Nuvalent and Clearside Biomedical 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.