Correlation Between Valneva SE and Dream Finders

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

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

Diversification Opportunities for Valneva SE and Dream Finders

0.57

Correlation Coefficient

Valneva SE  Dream Finders

Very weak diversification

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

Pair Corralation between Valneva SE and Dream Finders

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Dream Finders. But the stock apears to be less risky and, when comparing its historical volatility, Valneva SE ADR is 1.11 times less risky than Dream Finders. The stock trades about -0.08 of its potential returns per unit of risk. The Dream Finders Homes is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,523  in Dream Finders Homes on October 4, 2024 and sell it today you would lose (196.00) from holding Dream Finders Homes or give up 7.77% of portfolio value over 90 days.

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

Valneva SE ADR  vs.  Dream Finders Homes

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 weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Dream Finders Homes

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Valneva SE and Dream Finders

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

The idea behind Valneva SE ADR and Dream Finders Homes 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.