Correlation Between Vaccinex and Clovis Oncology

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

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

Diversification Opportunities for Vaccinex and Clovis Oncology

0.21

Correlation Coefficient

Vaccinex  Clovis Oncology

Modest diversification

The 3 months correlation between Vaccinex and Clovis is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vaccinex and Clovis Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clovis Oncology and Vaccinex 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 Vaccinex are associated (or correlated) with Clovis Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clovis Oncology has no effect on the direction of Vaccinex i.e., Vaccinex and Clovis Oncology go up and down completely randomly.

Pair Corralation between Vaccinex and Clovis Oncology

Given the investment horizon of 90 days Vaccinex is expected to under-perform the Clovis Oncology. But the stock apears to be less risky and, when comparing its historical volatility, Vaccinex is 2.43 times less risky than Clovis Oncology. The stock trades about -0.1 of its potential returns per unit of risk. The Clovis Oncology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  147.00  in Clovis Oncology on January 25, 2024 and sell it today you would lose (135.00) from holding Clovis Oncology or give up 91.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	38.87%
Values	Daily Returns

Vaccinex  vs.  Clovis Oncology

Vaccinex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vaccinex 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 May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Clovis Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clovis Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Clovis Oncology is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Vaccinex and Clovis Oncology

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

The idea behind Vaccinex and Clovis Oncology 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.