Correlation Between Biomarin Pharmaceutical and Halozyme Therapeutics
Can any of the company-specific risk be diversified away by investing in both Biomarin Pharmaceutical and Halozyme 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 Halozyme 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 Halozyme Therapeutics, you can compare the effects of market volatilities on Biomarin Pharmaceutical and Halozyme 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 Halozyme Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biomarin Pharmaceutical and Halozyme Therapeutics.
Diversification Opportunities for Biomarin Pharmaceutical and Halozyme Therapeutics
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Biomarin and Halozyme is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Biomarin Pharmaceutical and Halozyme Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halozyme 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 Halozyme Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halozyme Therapeutics has no effect on the direction of Biomarin Pharmaceutical i.e., Biomarin Pharmaceutical and Halozyme Therapeutics go up and down completely randomly.
Pair Corralation between Biomarin Pharmaceutical and Halozyme Therapeutics
Given the investment horizon of 90 days Biomarin Pharmaceutical is expected to under-perform the Halozyme Therapeutics. In addition to that, Biomarin Pharmaceutical is 1.51 times more volatile than Halozyme Therapeutics. It trades about -0.17 of its total potential returns per unit of risk. Halozyme Therapeutics is currently generating about 0.34 per unit of volatility. If you would invest 5,376 in Halozyme Therapeutics on November 9, 2024 and sell it today you would earn a total of 418.00 from holding Halozyme Therapeutics or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biomarin Pharmaceutical vs. Halozyme Therapeutics
Performance |
| Timeline |
| Biomarin Pharmaceutical |
| Halozyme Therapeutics |
Biomarin Pharmaceutical and Halozyme Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biomarin Pharmaceutical and Halozyme Therapeutics
The main advantage of trading using opposite Biomarin Pharmaceutical and Halozyme Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biomarin Pharmaceutical position performs unexpectedly, Halozyme 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 Halozyme Therapeutics will offset losses from the drop in Halozyme Therapeutics' long position.| Biomarin Pharmaceutical vs. Alnylam Pharmaceuticals | Biomarin Pharmaceutical vs. Exelixis | Biomarin Pharmaceutical vs. Halozyme Therapeutics | Biomarin Pharmaceutical vs. Arrowhead Pharmaceuticals |
| Halozyme Therapeutics vs. Agios Pharm | Halozyme Therapeutics vs. Insmed Inc | Halozyme Therapeutics vs. Ultragenyx | Halozyme Therapeutics vs. Biomarin Pharmaceutical |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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