Correlation Between Iovance Biotherapeutics and Nuvalent

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

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

Diversification Opportunities for Iovance Biotherapeutics and Nuvalent

0.78

Correlation Coefficient

Iovance Biotherapeutics  Nuvalent

Poor diversification

The 3 months correlation between Iovance and Nuvalent is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Iovance Biotherapeutics and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent and Iovance Biotherapeutics 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 Iovance Biotherapeutics 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 Iovance Biotherapeutics i.e., Iovance Biotherapeutics and Nuvalent go up and down completely randomly.

Pair Corralation between Iovance Biotherapeutics and Nuvalent

Given the investment horizon of 90 days Iovance Biotherapeutics is expected to under-perform the Nuvalent. In addition to that, Iovance Biotherapeutics is 2.19 times more volatile than Nuvalent. It trades about -0.31 of its total potential returns per unit of risk. Nuvalent is currently generating about -0.33 per unit of volatility. If you would invest  8,485  in Nuvalent on December 5, 2024 and sell it today you would lose (1,324) from holding Nuvalent or give up 15.6% of portfolio value over 90 days.

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

Iovance Biotherapeutics  vs.  Nuvalent

Iovance Biotherapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iovance Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat 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.

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 weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Iovance Biotherapeutics and Nuvalent

The main advantage of trading using opposite Iovance Biotherapeutics and Nuvalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iovance Biotherapeutics 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 Iovance Biotherapeutics 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.