Correlation Between Eyenovia and Nektar Therapeutics

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

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

Diversification Opportunities for Eyenovia and Nektar Therapeutics

0.58

Correlation Coefficient

Eyenovia  Nektar Therapeutics

Very weak diversification

The 3 months correlation between Eyenovia and Nektar is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Eyenovia and Nektar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nektar Therapeutics and Eyenovia 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 Eyenovia are associated (or correlated) with Nektar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nektar Therapeutics has no effect on the direction of Eyenovia i.e., Eyenovia and Nektar Therapeutics go up and down completely randomly.

Pair Corralation between Eyenovia and Nektar Therapeutics

Given the investment horizon of 90 days Eyenovia is expected to under-perform the Nektar Therapeutics. In addition to that, Eyenovia is 1.84 times more volatile than Nektar Therapeutics. It trades about -0.19 of its total potential returns per unit of risk. Nektar Therapeutics is currently generating about 0.01 per unit of volatility. If you would invest  90.00  in Nektar Therapeutics on December 21, 2024 and sell it today you would lose (5.73) from holding Nektar Therapeutics or give up 6.37% of portfolio value over 90 days.

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

Eyenovia  vs.  Nektar Therapeutics

Eyenovia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eyenovia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Nektar Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nektar Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nektar Therapeutics is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Eyenovia and Nektar Therapeutics

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

The idea behind Eyenovia and Nektar Therapeutics 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.