Correlation Between Innoviva and AdvanSix

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

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

Diversification Opportunities for Innoviva and AdvanSix

0.71

Correlation Coefficient

Innoviva  AdvanSix

Poor diversification

The 3 months correlation between Innoviva and AdvanSix is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Innoviva and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix and Innoviva 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 Innoviva are associated (or correlated) with AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of Innoviva i.e., Innoviva and AdvanSix go up and down completely randomly.

Pair Corralation between Innoviva and AdvanSix

Given the investment horizon of 90 days Innoviva is expected to generate 0.39 times more return on investment than AdvanSix. However, Innoviva is 2.58 times less risky than AdvanSix. It trades about -0.06 of its potential returns per unit of risk. AdvanSix is currently generating about -0.13 per unit of risk. If you would invest  1,779  in Innoviva on December 21, 2024 and sell it today you would lose (58.00) from holding Innoviva or give up 3.26% of portfolio value over 90 days.

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

Innoviva  vs.  AdvanSix

Innoviva

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innoviva has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Innoviva is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AdvanSix

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Innoviva and AdvanSix

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

The idea behind Innoviva and AdvanSix 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.