Correlation Between Nuvalent and Global Partners

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

By analyzing existing cross correlation between Nuvalent and Global Partners LP, you can compare the effects of market volatilities on Nuvalent and Global Partners 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 Global Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuvalent and Global Partners.

Diversification Opportunities for Nuvalent and Global Partners

-0.71

Correlation Coefficient

Nuvalent  Global Partners

Pay attention - limited upside

The 3 months correlation between Nuvalent and Global is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP 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 Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of Nuvalent i.e., Nuvalent and Global Partners go up and down completely randomly.

Pair Corralation between Nuvalent and Global Partners

Given the investment horizon of 90 days Nuvalent is expected to under-perform the Global Partners. In addition to that, Nuvalent is 7.98 times more volatile than Global Partners LP. It trades about -0.36 of its total potential returns per unit of risk. Global Partners LP is currently generating about 0.03 per unit of volatility. If you would invest  2,608  in Global Partners LP on October 1, 2024 and sell it today you would earn a total of  4.00  from holding Global Partners LP or generate 0.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Nuvalent  vs.  Global Partners LP

Nuvalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Global Partners LP

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global Partners is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuvalent and Global Partners

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

The idea behind Nuvalent and Global Partners LP 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.