Correlation Between Lion One and Nuvalent

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

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

Diversification Opportunities for Lion One and Nuvalent

0.17

Correlation Coefficient

Lion One  Nuvalent

Average diversification

The 3 months correlation between Lion and Nuvalent is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent and Lion One 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 Lion One Metals 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 Lion One i.e., Lion One and Nuvalent go up and down completely randomly.

Pair Corralation between Lion One and Nuvalent

Assuming the 90 days horizon Lion One Metals is expected to generate 2.38 times more return on investment than Nuvalent. However, Lion One is 2.38 times more volatile than Nuvalent. It trades about 0.09 of its potential returns per unit of risk. Nuvalent is currently generating about -0.05 per unit of risk. If you would invest  18.00  in Lion One Metals on December 19, 2024 and sell it today you would earn a total of  4.00  from holding Lion One Metals or generate 22.22% return on investment over 90 days.

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

Lion One Metals  vs.  Nuvalent

Lion One Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lion One Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Lion One reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Lion One and Nuvalent

The main advantage of trading using opposite Lion One and Nuvalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One 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 Lion One Metals 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.