Correlation Between Nuvalent and Eastern

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

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

Diversification Opportunities for Nuvalent and Eastern

0.63

Correlation Coefficient

Nuvalent  Eastern

Poor diversification

The 3 months correlation between Nuvalent and Eastern is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Nuvalent i.e., Nuvalent and Eastern go up and down completely randomly.

Pair Corralation between Nuvalent and Eastern

Given the investment horizon of 90 days Nuvalent is expected to under-perform the Eastern. In addition to that, Nuvalent is 1.08 times more volatile than Eastern Co. It trades about -0.09 of its total potential returns per unit of risk. Eastern Co is currently generating about 0.03 per unit of volatility. If you would invest  2,724  in Eastern Co on November 19, 2024 and sell it today you would earn a total of  82.00  from holding Eastern Co or generate 3.01% return on investment over 90 days.

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

Nuvalent  vs.  Eastern Co

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 weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Eastern

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nuvalent and Eastern

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

The idea behind Nuvalent and Eastern Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.