Correlation Between Vericel Corp and Minerva Neurosciences

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

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

Diversification Opportunities for Vericel Corp and Minerva Neurosciences

-0.63

Correlation Coefficient

Vericel Corp  Minerva Neurosciences

Excellent diversification

The 3 months correlation between Vericel and Minerva is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and Minerva Neurosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerva Neurosciences and Vericel Corp 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 Vericel Corp Ord are associated (or correlated) with Minerva Neurosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerva Neurosciences has no effect on the direction of Vericel Corp i.e., Vericel Corp and Minerva Neurosciences go up and down completely randomly.

Pair Corralation between Vericel Corp and Minerva Neurosciences

Given the investment horizon of 90 days Vericel Corp is expected to generate 3.33 times less return on investment than Minerva Neurosciences. But when comparing it to its historical volatility, Vericel Corp Ord is 3.03 times less risky than Minerva Neurosciences. It trades about 0.05 of its potential returns per unit of risk. Minerva Neurosciences is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  345.00  in Minerva Neurosciences on March 28, 2024 and sell it today you would lose (27.00) from holding Minerva Neurosciences or give up 7.83% of portfolio value over 90 days.

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

Vericel Corp Ord  vs.  Minerva Neurosciences

Vericel Corp Ord

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vericel Corp Ord has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Minerva Neurosciences

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Minerva Neurosciences are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Minerva Neurosciences showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vericel Corp and Minerva Neurosciences

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

The idea behind Vericel Corp Ord and Minerva Neurosciences 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.