Correlation Between Shattuck Labs and NextCure

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

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

Diversification Opportunities for Shattuck Labs and NextCure

0.49

Correlation Coefficient

Shattuck Labs  NextCure

Very weak diversification

The 3 months correlation between Shattuck and NextCure is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Shattuck Labs and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure and Shattuck Labs 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 Shattuck Labs are associated (or correlated) with NextCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCure has no effect on the direction of Shattuck Labs i.e., Shattuck Labs and NextCure go up and down completely randomly.

Pair Corralation between Shattuck Labs and NextCure

Given the investment horizon of 90 days Shattuck Labs is expected to under-perform the NextCure. In addition to that, Shattuck Labs is 2.38 times more volatile than NextCure. It trades about -0.15 of its total potential returns per unit of risk. NextCure is currently generating about -0.09 per unit of volatility. If you would invest  149.00  in NextCure on September 3, 2024 and sell it today you would lose (32.00) from holding NextCure or give up 21.48% of portfolio value over 90 days.

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

Shattuck Labs  vs.  NextCure

Shattuck Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shattuck Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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.

NextCure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextCure 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 basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Shattuck Labs and NextCure

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

The idea behind Shattuck Labs and NextCure 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.