Correlation Between Axsome Therapeutics and Incyte
Can any of the company-specific risk be diversified away by investing in both Axsome Therapeutics and Incyte 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 Axsome Therapeutics and Incyte into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axsome Therapeutics and Incyte, you can compare the effects of market volatilities on Axsome Therapeutics and Incyte 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 Axsome Therapeutics with a short position of Incyte. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axsome Therapeutics and Incyte.
Diversification Opportunities for Axsome Therapeutics and Incyte
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Axsome and Incyte is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Axsome Therapeutics and Incyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incyte and Axsome 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 Axsome Therapeutics are associated (or correlated) with Incyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incyte has no effect on the direction of Axsome Therapeutics i.e., Axsome Therapeutics and Incyte go up and down completely randomly.
Pair Corralation between Axsome Therapeutics and Incyte
Given the investment horizon of 90 days Axsome Therapeutics is expected to generate 1.47 times less return on investment than Incyte. But when comparing it to its historical volatility, Axsome Therapeutics is 1.38 times less risky than Incyte. It trades about 0.15 of its potential returns per unit of risk. Incyte is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,569 in Incyte on August 28, 2024 and sell it today you would earn a total of 783.00 from holding Incyte or generate 11.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axsome Therapeutics vs. Incyte
Performance |
| Timeline |
| Axsome Therapeutics |
| Incyte |
Axsome Therapeutics and Incyte Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axsome Therapeutics and Incyte
The main advantage of trading using opposite Axsome Therapeutics and Incyte positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axsome Therapeutics position performs unexpectedly, Incyte 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 Incyte will offset losses from the drop in Incyte's long position.| Axsome Therapeutics vs. Incyte | Axsome Therapeutics vs. Sarepta Therapeutics | Axsome Therapeutics vs. ACADIA Pharmaceuticals | Axsome Therapeutics vs. Viking Therapeutics |
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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