Correlation Between PureTech Health and Nuvalent

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

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

Diversification Opportunities for PureTech Health and Nuvalent

0.5

Correlation Coefficient

PureTech Health  Nuvalent

Very weak diversification

The 3 months correlation between PureTech and Nuvalent is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health PLC and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent and PureTech Health 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 PureTech Health PLC are associated (or correlated) with Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of PureTech Health i.e., PureTech Health and Nuvalent go up and down completely randomly.

Pair Corralation between PureTech Health and Nuvalent

Given the investment horizon of 90 days PureTech Health PLC is expected to generate 1.03 times more return on investment than Nuvalent. However, PureTech Health is 1.03 times more volatile than Nuvalent. It trades about 0.05 of its potential returns per unit of risk. Nuvalent is currently generating about 0.03 per unit of risk. If you would invest  1,784  in PureTech Health PLC on May 4, 2025 and sell it today you would earn a total of  124.90  from holding PureTech Health PLC or generate 7.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

PureTech Health PLC  vs.  Nuvalent

PureTech Health PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PureTech Health PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, PureTech Health may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Nuvalent

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvalent are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Nuvalent is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PureTech Health and Nuvalent

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

The idea behind PureTech Health PLC and Nuvalent 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.