Correlation Between Co Diagnostics and Novavax

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Can any of the company-specific risk be diversified away by investing in both Co Diagnostics and Novavax 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 Co Diagnostics and Novavax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Co Diagnostics and Novavax, you can compare the effects of market volatilities on Co Diagnostics and Novavax 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 Co Diagnostics with a short position of Novavax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Co Diagnostics and Novavax.

Diversification Opportunities for Co Diagnostics and Novavax

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between CODX and Novavax is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Co Diagnostics and Novavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novavax and Co Diagnostics 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 Co Diagnostics are associated (or correlated) with Novavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novavax has no effect on the direction of Co Diagnostics i.e., Co Diagnostics and Novavax go up and down completely randomly.

Pair Corralation between Co Diagnostics and Novavax

Given the investment horizon of 90 days Co Diagnostics is expected to under-perform the Novavax. But the stock apears to be less risky and, when comparing its historical volatility, Co Diagnostics is 1.81 times less risky than Novavax. The stock trades about -0.18 of its potential returns per unit of risk. The Novavax is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,238  in Novavax on August 30, 2024 and sell it today you would lose (376.00) from holding Novavax or give up 30.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Co Diagnostics  vs.  Novavax

 Performance 
       Timeline  
Co Diagnostics 

Risk-Adjusted Performance

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Weak
 
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Very Weak
Over the last 90 days Co Diagnostics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Novavax 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Novavax 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 fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Co Diagnostics and Novavax Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Co Diagnostics and Novavax

The main advantage of trading using opposite Co Diagnostics and Novavax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Co Diagnostics position performs unexpectedly, Novavax 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 Novavax will offset losses from the drop in Novavax's long position.
The idea behind Co Diagnostics and Novavax 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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