Correlation Between Nuvalent and Sabre Corpo

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

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

Diversification Opportunities for Nuvalent and Sabre Corpo

-0.2

Correlation Coefficient

Nuvalent  Sabre Corpo

Good diversification

The 3 months correlation between Nuvalent and Sabre is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Sabre Corpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Corpo 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 Sabre Corpo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Corpo has no effect on the direction of Nuvalent i.e., Nuvalent and Sabre Corpo go up and down completely randomly.

Pair Corralation between Nuvalent and Sabre Corpo

Given the investment horizon of 90 days Nuvalent is expected to under-perform the Sabre Corpo. In addition to that, Nuvalent is 1.21 times more volatile than Sabre Corpo. It trades about -0.35 of its total potential returns per unit of risk. Sabre Corpo is currently generating about -0.38 per unit of volatility. If you would invest  403.00  in Sabre Corpo on October 12, 2024 and sell it today you would lose (59.00) from holding Sabre Corpo or give up 14.64% of portfolio value over 90 days.

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

Nuvalent  vs.  Sabre Corpo

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.

Sabre Corpo

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Corpo are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Sabre Corpo may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nuvalent and Sabre Corpo

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

The idea behind Nuvalent and Sabre Corpo 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.