Correlation Between Nuvalent and Logility Supply

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

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

Diversification Opportunities for Nuvalent and Logility Supply

-0.5

Correlation Coefficient

Nuvalent  Logility Supply

Very good diversification

The 3 months correlation between Nuvalent and Logility is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Logility Supply Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logility Supply Chain 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 Logility Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logility Supply Chain has no effect on the direction of Nuvalent i.e., Nuvalent and Logility Supply go up and down completely randomly.

Pair Corralation between Nuvalent and Logility Supply

Given the investment horizon of 90 days Nuvalent is expected to under-perform the Logility Supply. But the stock apears to be less risky and, when comparing its historical volatility, Nuvalent is 1.34 times less risky than Logility Supply. The stock trades about -0.41 of its potential returns per unit of risk. The Logility Supply Chain is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,065  in Logility Supply Chain on October 3, 2024 and sell it today you would earn a total of  43.00  from holding Logility Supply Chain or generate 4.04% return on investment over 90 days.

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

Nuvalent  vs.  Logility Supply Chain

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.

Logility Supply Chain

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Logility Supply Chain are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Logility Supply may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nuvalent and Logility Supply

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

The idea behind Nuvalent and Logility Supply Chain 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..