Correlation Between Exelixis and Alector
Can any of the company-specific risk be diversified away by investing in both Exelixis and Alector 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 Exelixis and Alector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exelixis and Alector, you can compare the effects of market volatilities on Exelixis and Alector 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 Exelixis with a short position of Alector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelixis and Alector.
Diversification Opportunities for Exelixis and Alector
Good diversification
The 3 months correlation between Exelixis and Alector is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Exelixis and Alector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alector and Exelixis 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 Exelixis are associated (or correlated) with Alector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alector has no effect on the direction of Exelixis i.e., Exelixis and Alector go up and down completely randomly.
Pair Corralation between Exelixis and Alector
Given the investment horizon of 90 days Exelixis is expected to generate 0.39 times more return on investment than Alector. However, Exelixis is 2.56 times less risky than Alector. It trades about 0.1 of its potential returns per unit of risk. Alector is currently generating about -0.02 per unit of risk. If you would invest 1,727 in Exelixis on August 27, 2024 and sell it today you would earn a total of 1,834 from holding Exelixis or generate 106.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exelixis vs. Alector
Performance |
| Timeline |
| Exelixis |
| Alector |
Exelixis and Alector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exelixis and Alector
The main advantage of trading using opposite Exelixis and Alector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelixis position performs unexpectedly, Alector 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 Alector will offset losses from the drop in Alector's long position.| Exelixis vs. TG Therapeutics | Exelixis vs. Viking Therapeutics | Exelixis vs. Madrigal Pharmaceuticals | Exelixis vs. BioXcel Therapeutics |
| Alector vs. Eliem Therapeutics | Alector vs. HCW Biologics | Alector vs. Scpharmaceuticals | Alector 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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