Correlation Between Dynavax Technologies and NeuroMetrix

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

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

Diversification Opportunities for Dynavax Technologies and NeuroMetrix

-0.47

Correlation Coefficient

Dynavax Technologies  NeuroMetrix

Very good diversification

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

Pair Corralation between Dynavax Technologies and NeuroMetrix

Given the investment horizon of 90 days Dynavax Technologies is expected to generate 1.36 times less return on investment than NeuroMetrix. But when comparing it to its historical volatility, Dynavax Technologies is 1.25 times less risky than NeuroMetrix. It trades about 0.09 of its potential returns per unit of risk. NeuroMetrix is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  355.00  in NeuroMetrix on October 6, 2024 and sell it today you would earn a total of  38.00  from holding NeuroMetrix or generate 10.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Dynavax Technologies  vs.  NeuroMetrix

Dynavax Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynavax Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dynavax Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

NeuroMetrix

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dynavax Technologies and NeuroMetrix

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

The idea behind Dynavax Technologies and NeuroMetrix 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.