Correlation Between Enanta Pharmaceuticals and NovaBay Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Enanta Pharmaceuticals and NovaBay Pharmaceuticals 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 Enanta Pharmaceuticals and NovaBay Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enanta Pharmaceuticals and NovaBay Pharmaceuticals, you can compare the effects of market volatilities on Enanta Pharmaceuticals and NovaBay Pharmaceuticals 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 Enanta Pharmaceuticals with a short position of NovaBay Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enanta Pharmaceuticals and NovaBay Pharmaceuticals.
Diversification Opportunities for Enanta Pharmaceuticals and NovaBay Pharmaceuticals
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enanta and NovaBay is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Enanta Pharmaceuticals and NovaBay Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaBay Pharmaceuticals and Enanta 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 Enanta Pharmaceuticals are associated (or correlated) with NovaBay Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NovaBay Pharmaceuticals has no effect on the direction of Enanta Pharmaceuticals i.e., Enanta Pharmaceuticals and NovaBay Pharmaceuticals go up and down completely randomly.
Pair Corralation between Enanta Pharmaceuticals and NovaBay Pharmaceuticals
Given the investment horizon of 90 days Enanta Pharmaceuticals is expected to generate 1.16 times less return on investment than NovaBay Pharmaceuticals. In addition to that, Enanta Pharmaceuticals is 1.16 times more volatile than NovaBay Pharmaceuticals. It trades about 0.03 of its total potential returns per unit of risk. NovaBay Pharmaceuticals is currently generating about 0.03 per unit of volatility. If you would invest 59.00 in NovaBay Pharmaceuticals on December 28, 2024 and sell it today you would earn a total of 1.90 from holding NovaBay Pharmaceuticals or generate 3.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
Enanta Pharmaceuticals vs. NovaBay Pharmaceuticals
Performance |
Timeline |
Enanta Pharmaceuticals |
NovaBay Pharmaceuticals |
Enanta Pharmaceuticals and NovaBay Pharmaceuticals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Enanta Pharmaceuticals and NovaBay Pharmaceuticals
The main advantage of trading using opposite Enanta Pharmaceuticals and NovaBay Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enanta Pharmaceuticals position performs unexpectedly, NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals will offset losses from the drop in NovaBay Pharmaceuticals' long position.Enanta Pharmaceuticals vs. Monte Rosa Therapeutics | Enanta Pharmaceuticals vs. Design Therapeutics | Enanta Pharmaceuticals vs. Werewolf Therapeutics | Enanta Pharmaceuticals vs. Ikena Oncology |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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