Correlation Between GeoVax Labs and NovaBay Pharmaceuticals

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

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

Diversification Opportunities for GeoVax Labs and NovaBay Pharmaceuticals

0.1

Correlation Coefficient

GeoVax Labs  NovaBay Pharmaceuticals

Average diversification

The 3 months correlation between GeoVax and NovaBay is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding GeoVax Labs and NovaBay Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaBay Pharmaceuticals and GeoVax Labs 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 GeoVax Labs 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 GeoVax Labs i.e., GeoVax Labs and NovaBay Pharmaceuticals go up and down completely randomly.

Pair Corralation between GeoVax Labs and NovaBay Pharmaceuticals

Given the investment horizon of 90 days GeoVax Labs is expected to under-perform the NovaBay Pharmaceuticals. In addition to that, GeoVax Labs is 1.11 times more volatile than NovaBay Pharmaceuticals. It trades about -0.22 of its total potential returns per unit of risk. NovaBay Pharmaceuticals is currently generating about -0.24 per unit of volatility. If you would invest  68.00  in NovaBay Pharmaceuticals on September 23, 2024 and sell it today you would lose (15.00) from holding NovaBay Pharmaceuticals or give up 22.06% of portfolio value over 90 days.

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

GeoVax Labs  vs.  NovaBay Pharmaceuticals

GeoVax Labs

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days GeoVax Labs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady basic indicators, GeoVax Labs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NovaBay Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NovaBay Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GeoVax Labs and NovaBay Pharmaceuticals

The main advantage of trading using opposite GeoVax Labs and NovaBay Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GeoVax Labs 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.

The idea behind GeoVax Labs and NovaBay Pharmaceuticals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.