Correlation Between Nuvation Bio and Prestige Brand

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

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

Diversification Opportunities for Nuvation Bio and Prestige Brand

-0.46

Correlation Coefficient

Nuvation Bio  Prestige Brand

Very good diversification

The 3 months correlation between Nuvation and Prestige is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nuvation Bio and Prestige Brand Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Brand Holdings and Nuvation Bio 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 Nuvation Bio are associated (or correlated) with Prestige Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Brand Holdings has no effect on the direction of Nuvation Bio i.e., Nuvation Bio and Prestige Brand go up and down completely randomly.

Pair Corralation between Nuvation Bio and Prestige Brand

Given the investment horizon of 90 days Nuvation Bio is expected to under-perform the Prestige Brand. In addition to that, Nuvation Bio is 1.74 times more volatile than Prestige Brand Holdings. It trades about -0.15 of its total potential returns per unit of risk. Prestige Brand Holdings is currently generating about 0.01 per unit of volatility. If you would invest  8,499  in Prestige Brand Holdings on December 1, 2024 and sell it today you would lose (24.00) from holding Prestige Brand Holdings or give up 0.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nuvation Bio  vs.  Prestige Brand Holdings

Nuvation Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuvation Bio 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 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.

Prestige Brand Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prestige Brand Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Prestige Brand is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nuvation Bio and Prestige Brand

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

The idea behind Nuvation Bio and Prestige Brand Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.