Correlation Between Exelixis and Nuvalent

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

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

Diversification Opportunities for Exelixis and Nuvalent

-0.83

Correlation Coefficient

Exelixis  Nuvalent

Pay attention - limited upside

The 3 months correlation between Exelixis and Nuvalent is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Exelixis and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent and Exelixis 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 Exelixis are associated (or correlated) with Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of Exelixis i.e., Exelixis and Nuvalent go up and down completely randomly.

Pair Corralation between Exelixis and Nuvalent

Given the investment horizon of 90 days Exelixis is expected to generate 0.93 times more return on investment than Nuvalent. However, Exelixis is 1.08 times less risky than Nuvalent. It trades about 0.07 of its potential returns per unit of risk. Nuvalent is currently generating about -0.03 per unit of risk. If you would invest  3,370  in Exelixis on December 30, 2024 and sell it today you would earn a total of  300.00  from holding Exelixis or generate 8.9% return on investment over 90 days.

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

Exelixis  vs.  Nuvalent

Exelixis

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Exelixis are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Exelixis may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nuvalent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Nuvalent is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Exelixis and Nuvalent

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

The idea behind Exelixis and Nuvalent 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.