Correlation Between Amarin PLC and Scilex Holding
Can any of the company-specific risk be diversified away by investing in both Amarin PLC and Scilex Holding 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 Amarin PLC and Scilex Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amarin PLC and Scilex Holding, you can compare the effects of market volatilities on Amarin PLC and Scilex Holding 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 Amarin PLC with a short position of Scilex Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amarin PLC and Scilex Holding.
Diversification Opportunities for Amarin PLC and Scilex Holding
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Amarin and Scilex is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Amarin PLC and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding and Amarin PLC 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 Amarin PLC are associated (or correlated) with Scilex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scilex Holding has no effect on the direction of Amarin PLC i.e., Amarin PLC and Scilex Holding go up and down completely randomly.
Pair Corralation between Amarin PLC and Scilex Holding
Given the investment horizon of 90 days Amarin PLC is expected to under-perform the Scilex Holding. But the stock apears to be less risky and, when comparing its historical volatility, Amarin PLC is 6.24 times less risky than Scilex Holding. The stock trades about -0.24 of its potential returns per unit of risk. The Scilex Holding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Scilex Holding on August 28, 2024 and sell it today you would lose (1.00) from holding Scilex Holding or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amarin PLC vs. Scilex Holding
Performance |
| Timeline |
| Amarin PLC |
| Scilex Holding |
Amarin PLC and Scilex Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amarin PLC and Scilex Holding
The main advantage of trading using opposite Amarin PLC and Scilex Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amarin PLC position performs unexpectedly, Scilex Holding 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 Scilex Holding will offset losses from the drop in Scilex Holding's long position.| Amarin PLC vs. Scilex Holding | Amarin PLC vs. Biogen Inc | Amarin PLC vs. Gilead Sciences | Amarin PLC vs. AstraZeneca PLC ADR |
| Scilex Holding vs. Vince Holding Corp | Scilex Holding vs. Citi Trends | Scilex Holding vs. Under Armour C | Scilex Holding vs. SEI Investments |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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