Correlation Between NextCure and Shattuck Labs

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

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

Diversification Opportunities for NextCure and Shattuck Labs

0.46

Correlation Coefficient

NextCure  Shattuck Labs

Very weak diversification

The 3 months correlation between NextCure and Shattuck is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NextCure and Shattuck Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shattuck Labs and NextCure 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 NextCure are associated (or correlated) with Shattuck Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shattuck Labs has no effect on the direction of NextCure i.e., NextCure and Shattuck Labs go up and down completely randomly.

Pair Corralation between NextCure and Shattuck Labs

Given the investment horizon of 90 days NextCure is expected to generate 0.42 times more return on investment than Shattuck Labs. However, NextCure is 2.4 times less risky than Shattuck Labs. It trades about -0.09 of its potential returns per unit of risk. Shattuck Labs is currently generating about -0.16 per unit of risk. If you would invest  144.00  in NextCure on September 5, 2024 and sell it today you would lose (31.00) from holding NextCure or give up 21.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

NextCure  vs.  Shattuck Labs

NextCure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextCure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Shattuck Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shattuck Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting 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.

Pair Trading with NextCure and Shattuck Labs

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

The idea behind NextCure and Shattuck Labs 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.