Correlation Between Novavax and Ibio

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

By analyzing existing cross correlation between Novavax and Ibio Inc, you can compare the effects of market volatilities on Novavax and Ibio 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 Novavax with a short position of Ibio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novavax and Ibio.

Diversification Opportunities for Novavax and Ibio

-0.51

Correlation Coefficient

Novavax  Ibio

Excellent diversification

The 3 months correlation between Novavax and Ibio is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Novavax and Ibio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibio Inc and Novavax 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 Novavax are associated (or correlated) with Ibio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibio Inc has no effect on the direction of Novavax i.e., Novavax and Ibio go up and down completely randomly.

Pair Corralation between Novavax and Ibio

Given the investment horizon of 90 days Novavax is expected to under-perform the Ibio. But the stock apears to be less risky and, when comparing its historical volatility, Novavax is 1.23 times less risky than Ibio. The stock trades about -0.05 of its potential returns per unit of risk. The Ibio Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  294.00  in Ibio Inc on November 28, 2024 and sell it today you would earn a total of  82.00  from holding Ibio Inc or generate 27.89% return on investment over 90 days.

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

Novavax  vs.  Ibio Inc

Novavax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novavax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ibio Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ibio Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Ibio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novavax and Ibio

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

The idea behind Novavax and Ibio Inc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.