Correlation Between Amphastar and Ironwood Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Amphastar and Ironwood Pharmaceuticals 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 Amphastar and Ironwood Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amphastar P and Ironwood Pharmaceuticals, you can compare the effects of market volatilities on Amphastar and Ironwood Pharmaceuticals 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 Amphastar with a short position of Ironwood Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amphastar and Ironwood Pharmaceuticals.
Diversification Opportunities for Amphastar and Ironwood Pharmaceuticals
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Amphastar and Ironwood is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Amphastar P and Ironwood Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironwood Pharmaceuticals and Amphastar 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 Amphastar P are associated (or correlated) with Ironwood Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ironwood Pharmaceuticals has no effect on the direction of Amphastar i.e., Amphastar and Ironwood Pharmaceuticals go up and down completely randomly.
Pair Corralation between Amphastar and Ironwood Pharmaceuticals
Given the investment horizon of 90 days Amphastar P is expected to generate 0.51 times more return on investment than Ironwood Pharmaceuticals. However, Amphastar P is 1.96 times less risky than Ironwood Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Ironwood Pharmaceuticals is currently generating about -0.07 per unit of risk. If you would invest 4,164 in Amphastar P on August 27, 2024 and sell it today you would earn a total of 300.00 from holding Amphastar P or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amphastar P vs. Ironwood Pharmaceuticals
Performance |
| Timeline |
| Amphastar P |
| Ironwood Pharmaceuticals |
Amphastar and Ironwood Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amphastar and Ironwood Pharmaceuticals
The main advantage of trading using opposite Amphastar and Ironwood Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amphastar position performs unexpectedly, Ironwood Pharmaceuticals 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 Ironwood Pharmaceuticals will offset losses from the drop in Ironwood Pharmaceuticals' long position.| Amphastar vs. Collegium Pharmaceutical | Amphastar vs. Alkermes Plc | Amphastar vs. Evolus Inc | Amphastar vs. Neurocrine Biosciences |
| Ironwood Pharmaceuticals vs. Neurocrine Biosciences | Ironwood Pharmaceuticals vs. Amphastar P | Ironwood Pharmaceuticals vs. Collegium Pharmaceutical | Ironwood Pharmaceuticals vs. ANI Pharmaceuticals |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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