Correlation Between Vaxart and Novavax

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

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

Diversification Opportunities for Vaxart and Novavax

0.8

Correlation Coefficient

Vaxart  Novavax

Very poor diversification

The 3 months correlation between Vaxart and Novavax is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vaxart Inc and Novavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novavax and Vaxart 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 Vaxart Inc are associated (or correlated) with Novavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novavax has no effect on the direction of Vaxart i.e., Vaxart and Novavax go up and down completely randomly.

Pair Corralation between Vaxart and Novavax

Given the investment horizon of 90 days Vaxart Inc is expected to under-perform the Novavax. But the stock apears to be less risky and, when comparing its historical volatility, Vaxart Inc is 1.57 times less risky than Novavax. The stock trades about -0.14 of its potential returns per unit of risk. The Novavax is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,238  in Novavax on August 30, 2024 and sell it today you would lose (376.00) from holding Novavax or give up 30.37% of portfolio value over 90 days.

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

Vaxart Inc  vs.  Novavax

Vaxart Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vaxart Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Vaxart and Novavax

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

The idea behind Vaxart Inc and Novavax 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.