Correlation Between Avadel Pharmaceuticals and LENSAR
Can any of the company-specific risk be diversified away by investing in both Avadel Pharmaceuticals and LENSAR 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 Avadel Pharmaceuticals and LENSAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avadel Pharmaceuticals PLC and LENSAR Inc, you can compare the effects of market volatilities on Avadel Pharmaceuticals and LENSAR 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 Avadel Pharmaceuticals with a short position of LENSAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avadel Pharmaceuticals and LENSAR.
Diversification Opportunities for Avadel Pharmaceuticals and LENSAR
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avadel and LENSAR is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Avadel Pharmaceuticals PLC and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc and Avadel Pharmaceuticals 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 Avadel Pharmaceuticals PLC are associated (or correlated) with LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Avadel Pharmaceuticals i.e., Avadel Pharmaceuticals and LENSAR go up and down completely randomly.
Pair Corralation between Avadel Pharmaceuticals and LENSAR
Given the investment horizon of 90 days Avadel Pharmaceuticals PLC is expected to under-perform the LENSAR. But the stock apears to be less risky and, when comparing its historical volatility, Avadel Pharmaceuticals PLC is 1.38 times less risky than LENSAR. The stock trades about -0.09 of its potential returns per unit of risk. The LENSAR Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 321.00 in LENSAR Inc on September 3, 2024 and sell it today you would earn a total of 432.00 from holding LENSAR Inc or generate 134.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avadel Pharmaceuticals PLC vs. LENSAR Inc
Performance |
| Timeline |
| Avadel Pharmaceuticals |
| LENSAR Inc |
Avadel Pharmaceuticals and LENSAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avadel Pharmaceuticals and LENSAR
The main advantage of trading using opposite Avadel Pharmaceuticals and LENSAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avadel Pharmaceuticals position performs unexpectedly, LENSAR 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 LENSAR will offset losses from the drop in LENSAR's long position.| Avadel Pharmaceuticals vs. Neurocrine Biosciences | Avadel Pharmaceuticals vs. Ironwood Pharmaceuticals | Avadel Pharmaceuticals vs. Alkermes Plc | Avadel Pharmaceuticals vs. Intracellular Th |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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