Correlation Between Valneva SE and Freedom Bank

Can any of the company-specific risk be diversified away by investing in both Valneva SE and Freedom Bank 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 Freedom Bank 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 Freedom Bank of, you can compare the effects of market volatilities on Valneva SE and Freedom Bank 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 Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and Freedom Bank.

Diversification Opportunities for Valneva SE and Freedom Bank

-0.24

Correlation Coefficient

Valneva SE  Freedom Bank

Very good diversification

The 3 months correlation between Valneva and Freedom is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank 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 Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Valneva SE i.e., Valneva SE and Freedom Bank go up and down completely randomly.

Pair Corralation between Valneva SE and Freedom Bank

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Freedom Bank. In addition to that, Valneva SE is 2.42 times more volatile than Freedom Bank of. It trades about -0.25 of its total potential returns per unit of risk. Freedom Bank of is currently generating about 0.09 per unit of volatility. If you would invest  1,035  in Freedom Bank of on September 14, 2024 and sell it today you would earn a total of  65.00  from holding Freedom Bank of or generate 6.28% return on investment over 90 days.

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

Valneva SE ADR  vs.  Freedom Bank of

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 uncertain performance in the last few months, the Stock's essential 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.

Freedom Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Bank of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Freedom Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Valneva SE and Freedom Bank

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

The idea behind Valneva SE ADR and Freedom Bank of 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.