Correlation Between Novavax and OmniAb

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

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

Diversification Opportunities for Novavax and OmniAb

0.29

Correlation Coefficient

Novavax  OmniAb

Modest diversification

The 3 months correlation between Novavax and OmniAb is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Novavax and OmniAb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OmniAb 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 OmniAb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OmniAb Inc has no effect on the direction of Novavax i.e., Novavax and OmniAb go up and down completely randomly.

Pair Corralation between Novavax and OmniAb

Given the investment horizon of 90 days Novavax is expected to under-perform the OmniAb. In addition to that, Novavax is 1.75 times more volatile than OmniAb Inc. It trades about -0.09 of its total potential returns per unit of risk. OmniAb Inc is currently generating about -0.08 per unit of volatility. If you would invest  456.00  in OmniAb Inc on September 16, 2024 and sell it today you would lose (77.00) from holding OmniAb Inc or give up 16.89% of portfolio value over 90 days.

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

Novavax  vs.  OmniAb Inc

Novavax

Risk-Adjusted Performance

0 of 100

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 inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

OmniAb Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OmniAb Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Novavax and OmniAb

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

The idea behind Novavax and OmniAb 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.