Correlation Between Nuvation Bio and Alcoa Corp

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

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

Diversification Opportunities for Nuvation Bio and Alcoa Corp

-0.35

Correlation Coefficient

Nuvation Bio  Alcoa Corp

Very good diversification

The 3 months correlation between Nuvation and Alcoa is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nuvation Bio and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Nuvation Bio 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 Nuvation Bio are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of Nuvation Bio i.e., Nuvation Bio and Alcoa Corp go up and down completely randomly.

Pair Corralation between Nuvation Bio and Alcoa Corp

Given the investment horizon of 90 days Nuvation Bio is expected to generate 7.47 times less return on investment than Alcoa Corp. In addition to that, Nuvation Bio is 1.51 times more volatile than Alcoa Corp. It trades about 0.02 of its total potential returns per unit of risk. Alcoa Corp is currently generating about 0.22 per unit of volatility. If you would invest  3,041  in Alcoa Corp on September 4, 2024 and sell it today you would earn a total of  1,529  from holding Alcoa Corp or generate 50.28% return on investment over 90 days.

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

Nuvation Bio  vs.  Alcoa Corp

Nuvation Bio

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvation Bio are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nuvation Bio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alcoa Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuvation Bio and Alcoa Corp

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

The idea behind Nuvation Bio and Alcoa Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.