Correlation Between Nuvalent and Inhibrx

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

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

Diversification Opportunities for Nuvalent and Inhibrx

-0.03

Correlation Coefficient

Nuvalent  Inhibrx

Good diversification

The 3 months correlation between Nuvalent and Inhibrx is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Inhibrx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inhibrx 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 Inhibrx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inhibrx has no effect on the direction of Nuvalent i.e., Nuvalent and Inhibrx go up and down completely randomly.

Pair Corralation between Nuvalent and Inhibrx

Given the investment horizon of 90 days Nuvalent is expected to under-perform the Inhibrx. But the stock apears to be less risky and, when comparing its historical volatility, Nuvalent is 1.31 times less risky than Inhibrx. The stock trades about -0.03 of its potential returns per unit of risk. The Inhibrx is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,447  in Inhibrx on December 22, 2024 and sell it today you would lose (12.00) from holding Inhibrx or give up 0.83% of portfolio value over 90 days.

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

Nuvalent  vs.  Inhibrx

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 quite persistent basic indicators, Nuvalent is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Inhibrx

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Inhibrx are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, Inhibrx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuvalent and Inhibrx

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

The idea behind Nuvalent and Inhibrx 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.