Correlation Between Biomarin Pharmaceutical and CytomX Therapeutics
Can any of the company-specific risk be diversified away by investing in both Biomarin Pharmaceutical and CytomX 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 CytomX 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 CytomX Therapeutics, you can compare the effects of market volatilities on Biomarin Pharmaceutical and CytomX 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 CytomX Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biomarin Pharmaceutical and CytomX Therapeutics.
Diversification Opportunities for Biomarin Pharmaceutical and CytomX Therapeutics
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biomarin and CytomX is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Biomarin Pharmaceutical and CytomX Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CytomX 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 CytomX Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CytomX Therapeutics has no effect on the direction of Biomarin Pharmaceutical i.e., Biomarin Pharmaceutical and CytomX Therapeutics go up and down completely randomly.
Pair Corralation between Biomarin Pharmaceutical and CytomX Therapeutics
Given the investment horizon of 90 days Biomarin Pharmaceutical is expected to under-perform the CytomX Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Biomarin Pharmaceutical is 1.41 times less risky than CytomX Therapeutics. The stock trades about -0.19 of its potential returns per unit of risk. The CytomX Therapeutics is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 116.00 in CytomX Therapeutics on August 28, 2024 and sell it today you would lose (20.00) from holding CytomX Therapeutics or give up 17.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biomarin Pharmaceutical vs. CytomX Therapeutics
Performance |
| Timeline |
| Biomarin Pharmaceutical |
| CytomX Therapeutics |
Biomarin Pharmaceutical and CytomX Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biomarin Pharmaceutical and CytomX Therapeutics
The main advantage of trading using opposite Biomarin Pharmaceutical and CytomX Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biomarin Pharmaceutical position performs unexpectedly, CytomX 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 CytomX Therapeutics will offset losses from the drop in CytomX Therapeutics' long position.| Biomarin Pharmaceutical vs. Alnylam Pharmaceuticals | Biomarin Pharmaceutical vs. Exelixis | Biomarin Pharmaceutical vs. Halozyme Therapeutics | Biomarin Pharmaceutical vs. Arrowhead Pharmaceuticals |
| CytomX Therapeutics vs. Eliem Therapeutics | CytomX Therapeutics vs. HCW Biologics | CytomX Therapeutics vs. Scpharmaceuticals | CytomX Therapeutics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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