Correlation Between Arcutis Biotherapeutics and Legend Biotech
Can any of the company-specific risk be diversified away by investing in both Arcutis Biotherapeutics and Legend Biotech 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 Arcutis Biotherapeutics and Legend Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arcutis Biotherapeutics and Legend Biotech Corp, you can compare the effects of market volatilities on Arcutis Biotherapeutics and Legend Biotech 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 Arcutis Biotherapeutics with a short position of Legend Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcutis Biotherapeutics and Legend Biotech.
Diversification Opportunities for Arcutis Biotherapeutics and Legend Biotech
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Arcutis and Legend is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Arcutis Biotherapeutics and Legend Biotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend Biotech Corp and Arcutis Biotherapeutics 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 Arcutis Biotherapeutics are associated (or correlated) with Legend Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend Biotech Corp has no effect on the direction of Arcutis Biotherapeutics i.e., Arcutis Biotherapeutics and Legend Biotech go up and down completely randomly.
Pair Corralation between Arcutis Biotherapeutics and Legend Biotech
Given the investment horizon of 90 days Arcutis Biotherapeutics is expected to generate 1.44 times more return on investment than Legend Biotech. However, Arcutis Biotherapeutics is 1.44 times more volatile than Legend Biotech Corp. It trades about 0.27 of its potential returns per unit of risk. Legend Biotech Corp is currently generating about -0.09 per unit of risk. If you would invest 871.00 in Arcutis Biotherapeutics on August 28, 2024 and sell it today you would earn a total of 206.00 from holding Arcutis Biotherapeutics or generate 23.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arcutis Biotherapeutics vs. Legend Biotech Corp
Performance |
| Timeline |
| Arcutis Biotherapeutics |
| Legend Biotech Corp |
Arcutis Biotherapeutics and Legend Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arcutis Biotherapeutics and Legend Biotech
The main advantage of trading using opposite Arcutis Biotherapeutics and Legend Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcutis Biotherapeutics position performs unexpectedly, Legend Biotech 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 Legend Biotech will offset losses from the drop in Legend Biotech's long position.| Arcutis Biotherapeutics vs. Terns Pharmaceuticals | Arcutis Biotherapeutics vs. Amylyx Pharmaceuticals | Arcutis Biotherapeutics vs. Acumen Pharmaceuticals | Arcutis Biotherapeutics vs. Inozyme Pharma |
| Legend Biotech vs. Eliem Therapeutics | Legend Biotech vs. HCW Biologics | Legend Biotech vs. Scpharmaceuticals | Legend Biotech vs. Milestone 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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