Correlation Between Athira Pharma and Madrigal Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Athira Pharma and Madrigal 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 Athira Pharma and Madrigal Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Athira Pharma and Madrigal Pharmaceuticals, you can compare the effects of market volatilities on Athira Pharma and Madrigal 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 Athira Pharma with a short position of Madrigal Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athira Pharma and Madrigal Pharmaceuticals.
Diversification Opportunities for Athira Pharma and Madrigal Pharmaceuticals
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Athira and Madrigal is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Athira Pharma and Madrigal Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madrigal Pharmaceuticals and Athira Pharma 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 Athira Pharma are associated (or correlated) with Madrigal Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madrigal Pharmaceuticals has no effect on the direction of Athira Pharma i.e., Athira Pharma and Madrigal Pharmaceuticals go up and down completely randomly.
Pair Corralation between Athira Pharma and Madrigal Pharmaceuticals
Given the investment horizon of 90 days Athira Pharma is expected to generate 1.35 times less return on investment than Madrigal Pharmaceuticals. In addition to that, Athira Pharma is 1.7 times more volatile than Madrigal Pharmaceuticals. It trades about 0.15 of its total potential returns per unit of risk. Madrigal Pharmaceuticals is currently generating about 0.34 per unit of volatility. If you would invest 21,700 in Madrigal Pharmaceuticals on August 28, 2024 and sell it today you would earn a total of 12,818 from holding Madrigal Pharmaceuticals or generate 59.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Athira Pharma vs. Madrigal Pharmaceuticals
Performance |
| Timeline |
| Athira Pharma |
| Madrigal Pharmaceuticals |
Athira Pharma and Madrigal Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Athira Pharma and Madrigal Pharmaceuticals
The main advantage of trading using opposite Athira Pharma and Madrigal Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Athira Pharma position performs unexpectedly, Madrigal 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 Madrigal Pharmaceuticals will offset losses from the drop in Madrigal Pharmaceuticals' long position.| Athira Pharma vs. Eliem Therapeutics | Athira Pharma vs. HCW Biologics | Athira Pharma vs. Scpharmaceuticals | Athira Pharma vs. Milestone Pharmaceuticals |
| Madrigal Pharmaceuticals vs. Eliem Therapeutics | Madrigal Pharmaceuticals vs. HCW Biologics | Madrigal Pharmaceuticals vs. Scpharmaceuticals | Madrigal Pharmaceuticals 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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