Correlation Between Avadel Pharmaceuticals and Loyalty Ventures

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

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

Diversification Opportunities for Avadel Pharmaceuticals and Loyalty Ventures

0.71

Correlation Coefficient

Avadel Pharmaceuticals  Loyalty Ventures

Poor diversification

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

Pair Corralation between Avadel Pharmaceuticals and Loyalty Ventures

If you would invest (100.00) in Loyalty Ventures on October 23, 2024 and sell it today you would earn a total of  100.00  from holding Loyalty Ventures or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

Avadel Pharmaceuticals PLC  vs.  Loyalty Ventures

Avadel Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Loyalty Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loyalty Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Loyalty Ventures is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Avadel Pharmaceuticals and Loyalty Ventures

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

The idea behind Avadel Pharmaceuticals PLC and Loyalty Ventures 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.