Correlation Between Inflection Point and NOVARTIS

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

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

Diversification Opportunities for Inflection Point and NOVARTIS

-0.37

Correlation Coefficient

Inflection Point  NOVARTIS

Very good diversification

The 3 months correlation between Inflection and NOVARTIS is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and NOVARTIS CAP P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVARTIS CAP P and Inflection Point 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 Inflection Point Acquisition are associated (or correlated) with NOVARTIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVARTIS CAP P has no effect on the direction of Inflection Point i.e., Inflection Point and NOVARTIS go up and down completely randomly.

Pair Corralation between Inflection Point and NOVARTIS

Assuming the 90 days horizon Inflection Point Acquisition is expected to under-perform the NOVARTIS. In addition to that, Inflection Point is 4.65 times more volatile than NOVARTIS CAP P. It trades about -0.05 of its total potential returns per unit of risk. NOVARTIS CAP P is currently generating about 0.12 per unit of volatility. If you would invest  8,798  in NOVARTIS CAP P on December 25, 2024 and sell it today you would earn a total of  613.00  from holding NOVARTIS CAP P or generate 6.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.33%
Values	Daily Returns

Inflection Point Acquisition  vs.  NOVARTIS CAP P

Inflection Point Acq

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inflection Point Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NOVARTIS CAP P

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NOVARTIS CAP P are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NOVARTIS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Inflection Point and NOVARTIS

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

The idea behind Inflection Point Acquisition and NOVARTIS CAP P 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.