Correlation Between AdvanSix and Innoviva

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

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

Diversification Opportunities for AdvanSix and Innoviva

0.85

Correlation Coefficient

AdvanSix  Innoviva

Very poor diversification

The 3 months correlation between AdvanSix and Innoviva is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding AdvanSix and Innoviva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviva and AdvanSix 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 AdvanSix are associated (or correlated) with Innoviva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innoviva has no effect on the direction of AdvanSix i.e., AdvanSix and Innoviva go up and down completely randomly.

Pair Corralation between AdvanSix and Innoviva

Given the investment horizon of 90 days AdvanSix is expected to under-perform the Innoviva. In addition to that, AdvanSix is 2.58 times more volatile than Innoviva. It trades about -0.13 of its total potential returns per unit of risk. Innoviva is currently generating about -0.06 per unit of volatility. If you would invest  1,779  in Innoviva on December 21, 2024 and sell it today you would lose (58.00) from holding Innoviva or give up 3.26% of portfolio value over 90 days.

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

AdvanSix  vs.  Innoviva

AdvanSix

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvanSix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Innoviva

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innoviva has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Innoviva is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AdvanSix and Innoviva

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

The idea behind AdvanSix and Innoviva 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.