Correlation Between Novavax and CureVac NV

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

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

Diversification Opportunities for Novavax and CureVac NV

0.7

Correlation Coefficient

Novavax  CureVac NV

Poor diversification

The 3 months correlation between Novavax and CureVac is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Novavax and CureVac NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CureVac NV and Novavax 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 Novavax are associated (or correlated) with CureVac NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CureVac NV has no effect on the direction of Novavax i.e., Novavax and CureVac NV go up and down completely randomly.

Pair Corralation between Novavax and CureVac NV

Given the investment horizon of 90 days Novavax is expected to under-perform the CureVac NV. In addition to that, Novavax is 1.73 times more volatile than CureVac NV. It trades about -0.08 of its total potential returns per unit of risk. CureVac NV is currently generating about -0.02 per unit of volatility. If you would invest  306.00  in CureVac NV on September 1, 2024 and sell it today you would lose (19.00) from holding CureVac NV or give up 6.21% of portfolio value over 90 days.

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

Novavax  vs.  CureVac NV

Novavax

Risk-Adjusted Performance

0 of 100

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.

CureVac NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CureVac NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CureVac NV is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Novavax and CureVac NV

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

The idea behind Novavax and CureVac NV 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.