Correlation Between Biogen and Avax Techs
Can any of the company-specific risk be diversified away by investing in both Biogen and Avax Techs 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 Biogen and Avax Techs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biogen Inc and Avax Techs, you can compare the effects of market volatilities on Biogen and Avax Techs 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 Biogen with a short position of Avax Techs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biogen and Avax Techs.
Diversification Opportunities for Biogen and Avax Techs
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biogen and Avax is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and Avax Techs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avax Techs and Biogen 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 Biogen Inc are associated (or correlated) with Avax Techs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avax Techs has no effect on the direction of Biogen i.e., Biogen and Avax Techs go up and down completely randomly.
Pair Corralation between Biogen and Avax Techs
Given the investment horizon of 90 days Biogen Inc is expected to under-perform the Avax Techs. But the stock apears to be less risky and, when comparing its historical volatility, Biogen Inc is 135.68 times less risky than Avax Techs. The stock trades about -0.12 of its potential returns per unit of risk. The Avax Techs is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Avax Techs on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Avax Techs or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Biogen Inc vs. Avax Techs
Performance |
| Timeline |
| Biogen Inc |
| Avax Techs |
Biogen and Avax Techs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biogen and Avax Techs
The main advantage of trading using opposite Biogen and Avax Techs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen position performs unexpectedly, Avax Techs 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 Avax Techs will offset losses from the drop in Avax Techs' long position.| Biogen vs. Bristol Myers Squibb | Biogen vs. AbbVie Inc | Biogen vs. Merck Company | Biogen vs. Gilead Sciences |
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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