Correlation Between Erasca and LivaNova PLC
Can any of the company-specific risk be diversified away by investing in both Erasca and LivaNova PLC 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 Erasca and LivaNova PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erasca Inc and LivaNova PLC, you can compare the effects of market volatilities on Erasca and LivaNova PLC 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 Erasca with a short position of LivaNova PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erasca and LivaNova PLC.
Diversification Opportunities for Erasca and LivaNova PLC
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erasca and LivaNova is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Erasca Inc and LivaNova PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivaNova PLC and Erasca 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 Erasca Inc are associated (or correlated) with LivaNova PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivaNova PLC has no effect on the direction of Erasca i.e., Erasca and LivaNova PLC go up and down completely randomly.
Pair Corralation between Erasca and LivaNova PLC
Given the investment horizon of 90 days Erasca Inc is expected to generate 1.94 times more return on investment than LivaNova PLC. However, Erasca is 1.94 times more volatile than LivaNova PLC. It trades about 0.07 of its potential returns per unit of risk. LivaNova PLC is currently generating about -0.05 per unit of risk. If you would invest 264.00 in Erasca Inc on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Erasca Inc or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Erasca Inc vs. LivaNova PLC
Performance |
| Timeline |
| Erasca Inc |
| LivaNova PLC |
Erasca and LivaNova PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erasca and LivaNova PLC
The main advantage of trading using opposite Erasca and LivaNova PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erasca position performs unexpectedly, LivaNova PLC 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 LivaNova PLC will offset losses from the drop in LivaNova PLC's long position.| Erasca vs. Eliem Therapeutics | Erasca vs. HCW Biologics | Erasca vs. Scpharmaceuticals | Erasca vs. Milestone Pharmaceuticals |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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