Correlation Between Bavarian Nordic and IA Invest

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

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

Diversification Opportunities for Bavarian Nordic and IA Invest

-0.47

Correlation Coefficient

Bavarian Nordic  IA Invest

Very good diversification

The 3 months correlation between Bavarian and IAIACVF is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and IA Invest Advice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Invest Advice and Bavarian Nordic 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 Bavarian Nordic are associated (or correlated) with IA Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Invest Advice has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and IA Invest go up and down completely randomly.

Pair Corralation between Bavarian Nordic and IA Invest

Assuming the 90 days trading horizon Bavarian Nordic is expected to generate 2.56 times more return on investment than IA Invest. However, Bavarian Nordic is 2.56 times more volatile than IA Invest Advice. It trades about 0.06 of its potential returns per unit of risk. IA Invest Advice is currently generating about -0.13 per unit of risk. If you would invest  19,620  in Bavarian Nordic on October 8, 2024 and sell it today you would earn a total of  345.00  from holding Bavarian Nordic or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bavarian Nordic  vs.  IA Invest Advice

Bavarian Nordic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bavarian Nordic is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

IA Invest Advice

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IA Invest Advice are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, IA Invest may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bavarian Nordic and IA Invest

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

The idea behind Bavarian Nordic and IA Invest Advice 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.