Correlation Between BioXcel Therapeutics and Madrigal Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both BioXcel Therapeutics and Madrigal Pharmaceuticals 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 BioXcel Therapeutics and Madrigal Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioXcel Therapeutics and Madrigal Pharmaceuticals, you can compare the effects of market volatilities on BioXcel Therapeutics and Madrigal Pharmaceuticals 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 BioXcel Therapeutics with a short position of Madrigal Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioXcel Therapeutics and Madrigal Pharmaceuticals.
Diversification Opportunities for BioXcel Therapeutics and Madrigal Pharmaceuticals
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BioXcel and Madrigal is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BioXcel Therapeutics and Madrigal Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madrigal Pharmaceuticals and BioXcel 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 BioXcel Therapeutics are associated (or correlated) with Madrigal Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madrigal Pharmaceuticals has no effect on the direction of BioXcel Therapeutics i.e., BioXcel Therapeutics and Madrigal Pharmaceuticals go up and down completely randomly.
Pair Corralation between BioXcel Therapeutics and Madrigal Pharmaceuticals
Given the investment horizon of 90 days BioXcel Therapeutics is expected to generate 2.75 times more return on investment than Madrigal Pharmaceuticals. However, BioXcel Therapeutics is 2.75 times more volatile than Madrigal Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Madrigal Pharmaceuticals is currently generating about 0.02 per unit of risk. If you would invest 32.00 in BioXcel Therapeutics on October 20, 2024 and sell it today you would earn a total of 2.00 from holding BioXcel Therapeutics or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BioXcel Therapeutics vs. Madrigal Pharmaceuticals
Performance |
| Timeline |
| BioXcel Therapeutics |
| Madrigal Pharmaceuticals |
BioXcel Therapeutics and Madrigal Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioXcel Therapeutics and Madrigal Pharmaceuticals
The main advantage of trading using opposite BioXcel Therapeutics and Madrigal Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioXcel Therapeutics position performs unexpectedly, Madrigal Pharmaceuticals 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 Madrigal Pharmaceuticals will offset losses from the drop in Madrigal Pharmaceuticals' long position.| BioXcel Therapeutics vs. Terns Pharmaceuticals | BioXcel Therapeutics vs. Amylyx Pharmaceuticals | BioXcel Therapeutics vs. Acumen Pharmaceuticals | BioXcel Therapeutics vs. Inozyme Pharma |
| Madrigal Pharmaceuticals vs. TG Therapeutics | Madrigal Pharmaceuticals vs. Terns Pharmaceuticals | Madrigal Pharmaceuticals vs. Hepion Pharmaceuticals | Madrigal Pharmaceuticals vs. Viking Therapeutics |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |