Correlation Between Nuvalent and Garmin

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

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

Diversification Opportunities for Nuvalent and Garmin

-0.09

Correlation Coefficient

Nuvalent  Garmin

Good diversification

The 3 months correlation between Nuvalent and Garmin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin 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 Garmin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garmin has no effect on the direction of Nuvalent i.e., Nuvalent and Garmin go up and down completely randomly.

Pair Corralation between Nuvalent and Garmin

Given the investment horizon of 90 days Nuvalent is expected to under-perform the Garmin. In addition to that, Nuvalent is 1.21 times more volatile than Garmin. It trades about -0.04 of its total potential returns per unit of risk. Garmin is currently generating about 0.01 per unit of volatility. If you would invest  20,824  in Garmin on December 20, 2024 and sell it today you would earn a total of  53.00  from holding Garmin or generate 0.25% return on investment over 90 days.

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

Nuvalent  vs.  Garmin

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.

Garmin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garmin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Garmin is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nuvalent and Garmin

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

The idea behind Nuvalent and Garmin 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.