Correlation Between Biomarin Pharmaceutical and BioXcel Therapeutics
Can any of the company-specific risk be diversified away by investing in both Biomarin Pharmaceutical and BioXcel Therapeutics 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 Biomarin Pharmaceutical and BioXcel Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biomarin Pharmaceutical and BioXcel Therapeutics, you can compare the effects of market volatilities on Biomarin Pharmaceutical and BioXcel Therapeutics 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 Biomarin Pharmaceutical with a short position of BioXcel Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biomarin Pharmaceutical and BioXcel Therapeutics.
Diversification Opportunities for Biomarin Pharmaceutical and BioXcel Therapeutics
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Biomarin and BioXcel is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Biomarin Pharmaceutical and BioXcel Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioXcel Therapeutics and Biomarin Pharmaceutical 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 Biomarin Pharmaceutical are associated (or correlated) with BioXcel Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioXcel Therapeutics has no effect on the direction of Biomarin Pharmaceutical i.e., Biomarin Pharmaceutical and BioXcel Therapeutics go up and down completely randomly.
Pair Corralation between Biomarin Pharmaceutical and BioXcel Therapeutics
Given the investment horizon of 90 days Biomarin Pharmaceutical is expected to generate 0.24 times more return on investment than BioXcel Therapeutics. However, Biomarin Pharmaceutical is 4.2 times less risky than BioXcel Therapeutics. It trades about -0.21 of its potential returns per unit of risk. BioXcel Therapeutics is currently generating about -0.22 per unit of risk. If you would invest 7,013 in Biomarin Pharmaceutical on August 28, 2024 and sell it today you would lose (504.00) from holding Biomarin Pharmaceutical or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biomarin Pharmaceutical vs. BioXcel Therapeutics
Performance |
| Timeline |
| Biomarin Pharmaceutical |
| BioXcel Therapeutics |
Biomarin Pharmaceutical and BioXcel Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biomarin Pharmaceutical and BioXcel Therapeutics
The main advantage of trading using opposite Biomarin Pharmaceutical and BioXcel Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biomarin Pharmaceutical position performs unexpectedly, BioXcel Therapeutics 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 BioXcel Therapeutics will offset losses from the drop in BioXcel Therapeutics' long position.| Biomarin Pharmaceutical vs. Alnylam Pharmaceuticals | Biomarin Pharmaceutical vs. Exelixis | Biomarin Pharmaceutical vs. Halozyme Therapeutics | Biomarin Pharmaceutical vs. Arrowhead Pharmaceuticals |
| BioXcel Therapeutics vs. Terns Pharmaceuticals | BioXcel Therapeutics vs. Amylyx Pharmaceuticals | BioXcel Therapeutics vs. Acumen Pharmaceuticals | BioXcel Therapeutics vs. Inozyme Pharma |
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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