Correlation Between Nuvalent and ARK Venture

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

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

Diversification Opportunities for Nuvalent and ARK Venture

-0.76

Correlation Coefficient

Nuvalent  ARK Venture

Pay attention - limited upside

The 3 months correlation between Nuvalent and ARK is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and ARK Venture Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Venture Fund and Nuvalent 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 Nuvalent are associated (or correlated) with ARK Venture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Venture Fund has no effect on the direction of Nuvalent i.e., Nuvalent and ARK Venture go up and down completely randomly.

Pair Corralation between Nuvalent and ARK Venture

Given the investment horizon of 90 days Nuvalent is expected to generate 2.95 times more return on investment than ARK Venture. However, Nuvalent is 2.95 times more volatile than ARK Venture Fund. It trades about 0.07 of its potential returns per unit of risk. ARK Venture Fund is currently generating about 0.09 per unit of risk. If you would invest  3,273  in Nuvalent on October 10, 2024 and sell it today you would earn a total of  4,739  from holding Nuvalent or generate 144.79% return on investment over 90 days.

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

Nuvalent  vs.  ARK Venture Fund

Nuvalent

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

ARK Venture Fund

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Venture Fund are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, ARK Venture may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nuvalent and ARK Venture

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

The idea behind Nuvalent and ARK Venture Fund 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.