Correlation Between Aquestive Therapeutics and Ironwood Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Aquestive Therapeutics 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 Aquestive Therapeutics and Ironwood Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquestive Therapeutics and Ironwood Pharmaceuticals, you can compare the effects of market volatilities on Aquestive Therapeutics 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 Aquestive Therapeutics with a short position of Ironwood Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquestive Therapeutics and Ironwood Pharmaceuticals.
Diversification Opportunities for Aquestive Therapeutics and Ironwood Pharmaceuticals
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aquestive and Ironwood is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aquestive Therapeutics and Ironwood Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironwood Pharmaceuticals and Aquestive 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 Aquestive Therapeutics 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 Aquestive Therapeutics i.e., Aquestive Therapeutics and Ironwood Pharmaceuticals go up and down completely randomly.
Pair Corralation between Aquestive Therapeutics and Ironwood Pharmaceuticals
Given the investment horizon of 90 days Aquestive Therapeutics is expected to generate 0.34 times more return on investment than Ironwood Pharmaceuticals. However, Aquestive Therapeutics is 2.94 times less risky than Ironwood Pharmaceuticals. It trades about -0.04 of its potential returns per unit of risk. Ironwood Pharmaceuticals is currently generating about -0.39 per unit of risk. If you would invest 313.00 in Aquestive Therapeutics on November 9, 2024 and sell it today you would lose (11.00) from holding Aquestive Therapeutics or give up 3.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aquestive Therapeutics vs. Ironwood Pharmaceuticals
Performance |
| Timeline |
| Aquestive Therapeutics |
| Ironwood Pharmaceuticals |
Aquestive Therapeutics and Ironwood Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquestive Therapeutics and Ironwood Pharmaceuticals
The main advantage of trading using opposite Aquestive Therapeutics and Ironwood Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquestive Therapeutics 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.| Aquestive Therapeutics vs. Evoke Pharma | Aquestive Therapeutics vs. Dynavax Technologies | Aquestive Therapeutics vs. Amphastar P | Aquestive Therapeutics vs. Lantheus Holdings |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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