Correlation Between Nuvation Bio and Zoetis

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

By analyzing existing cross correlation between Nuvation Bio and Zoetis Inc, you can compare the effects of market volatilities on Nuvation Bio and Zoetis 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 Zoetis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuvation Bio and Zoetis.

Diversification Opportunities for Nuvation Bio and Zoetis

-0.11

Correlation Coefficient

Nuvation Bio  Zoetis

Good diversification

The 3 months correlation between Nuvation and Zoetis is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nuvation Bio and Zoetis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoetis Inc 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 Zoetis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoetis Inc has no effect on the direction of Nuvation Bio i.e., Nuvation Bio and Zoetis go up and down completely randomly.

Pair Corralation between Nuvation Bio and Zoetis

Given the investment horizon of 90 days Nuvation Bio is expected to generate 3.15 times more return on investment than Zoetis. However, Nuvation Bio is 3.15 times more volatile than Zoetis Inc. It trades about 0.03 of its potential returns per unit of risk. Zoetis Inc is currently generating about 0.01 per unit of risk. If you would invest  280.00  in Nuvation Bio on September 3, 2024 and sell it today you would earn a total of  10.00  from holding Nuvation Bio or generate 3.57% return on investment over 90 days.

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

Nuvation Bio  vs.  Zoetis Inc

Nuvation Bio

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvation Bio are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nuvation Bio is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Zoetis Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zoetis Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Zoetis is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nuvation Bio and Zoetis

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

The idea behind Nuvation Bio and Zoetis Inc 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..