Correlation Between Akero Therapeutics and IVERIC Bio
Can any of the company-specific risk be diversified away by investing in both Akero Therapeutics and IVERIC Bio 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 Akero Therapeutics and IVERIC Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akero Therapeutics and IVERIC Bio, you can compare the effects of market volatilities on Akero Therapeutics and IVERIC Bio 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 Akero Therapeutics with a short position of IVERIC Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akero Therapeutics and IVERIC Bio.
Diversification Opportunities for Akero Therapeutics and IVERIC Bio
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Akero and IVERIC is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Akero Therapeutics and IVERIC Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IVERIC Bio and Akero Therapeutics 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 Akero Therapeutics are associated (or correlated) with IVERIC Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IVERIC Bio has no effect on the direction of Akero Therapeutics i.e., Akero Therapeutics and IVERIC Bio go up and down completely randomly.
Pair Corralation between Akero Therapeutics and IVERIC Bio
Given the investment horizon of 90 days Akero Therapeutics is expected to generate 8.86 times less return on investment than IVERIC Bio. In addition to that, Akero Therapeutics is 1.33 times more volatile than IVERIC Bio. It trades about 0.02 of its total potential returns per unit of risk. IVERIC Bio is currently generating about 0.19 per unit of volatility. If you would invest 1,897 in IVERIC Bio on August 31, 2024 and sell it today you would earn a total of 2,098 from holding IVERIC Bio or generate 110.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 26.57% |
| Values | Daily Returns |
Akero Therapeutics vs. IVERIC Bio
Performance |
| Timeline |
| Akero Therapeutics |
| IVERIC Bio |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Akero Therapeutics and IVERIC Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akero Therapeutics and IVERIC Bio
The main advantage of trading using opposite Akero Therapeutics and IVERIC Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akero Therapeutics position performs unexpectedly, IVERIC Bio 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 IVERIC Bio will offset losses from the drop in IVERIC Bio's long position.| Akero Therapeutics vs. Terns Pharmaceuticals | Akero Therapeutics vs. Madrigal Pharmaceuticals | Akero Therapeutics vs. Inozyme Pharma | Akero Therapeutics vs. Viking Therapeutics |
| IVERIC Bio vs. Blueprint Medicines Corp | IVERIC Bio vs. Amylyx Pharmaceuticals | IVERIC Bio vs. Day One Biopharmaceuticals | IVERIC Bio vs. Immunovant |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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