Correlation Between Phio Pharmaceuticals and NovaBay Pharmaceuticals

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

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

Diversification Opportunities for Phio Pharmaceuticals and NovaBay Pharmaceuticals

0.3

Correlation Coefficient

Phio Pharmaceuticals  NovaBay Pharmaceuticals

Weak diversification

The 3 months correlation between Phio and NovaBay is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Phio Pharmaceuticals Corp and NovaBay Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaBay Pharmaceuticals and Phio Pharmaceuticals 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 Phio Pharmaceuticals Corp are associated (or correlated) with NovaBay Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NovaBay Pharmaceuticals has no effect on the direction of Phio Pharmaceuticals i.e., Phio Pharmaceuticals and NovaBay Pharmaceuticals go up and down completely randomly.

Pair Corralation between Phio Pharmaceuticals and NovaBay Pharmaceuticals

Given the investment horizon of 90 days Phio Pharmaceuticals Corp is expected to under-perform the NovaBay Pharmaceuticals. In addition to that, Phio Pharmaceuticals is 1.81 times more volatile than NovaBay Pharmaceuticals. It trades about -0.15 of its total potential returns per unit of risk. NovaBay Pharmaceuticals is currently generating about -0.24 per unit of volatility. If you would invest  68.00  in NovaBay Pharmaceuticals on September 23, 2024 and sell it today you would lose (15.00) from holding NovaBay Pharmaceuticals or give up 22.06% of portfolio value over 90 days.

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

Phio Pharmaceuticals Corp  vs.  NovaBay Pharmaceuticals

Phio Pharmaceuticals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phio Pharmaceuticals Corp 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 forward 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.

NovaBay Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NovaBay Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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 current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Phio Pharmaceuticals and NovaBay Pharmaceuticals

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

The idea behind Phio Pharmaceuticals Corp and NovaBay Pharmaceuticals 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.