Correlation Between Nuvalent and Valneva SE

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

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

Diversification Opportunities for Nuvalent and Valneva SE

0.57

Correlation Coefficient

Nuvalent  Valneva SE

Very weak diversification

The 3 months correlation between Nuvalent and Valneva is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of Nuvalent i.e., Nuvalent and Valneva SE go up and down completely randomly.

Pair Corralation between Nuvalent and Valneva SE

Given the investment horizon of 90 days Nuvalent is expected to generate 0.63 times more return on investment than Valneva SE. However, Nuvalent is 1.58 times less risky than Valneva SE. It trades about -0.16 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.12 per unit of risk. If you would invest  10,800  in Nuvalent on September 20, 2024 and sell it today you would lose (2,342) from holding Nuvalent or give up 21.69% of portfolio value over 90 days.

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

Nuvalent  vs.  Valneva SE ADR

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Valneva SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Nuvalent and Valneva SE

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

The idea behind Nuvalent and Valneva SE ADR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.