Correlation Between Amicus Therapeutics and Incyte
Can any of the company-specific risk be diversified away by investing in both Amicus Therapeutics and Incyte 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 Amicus Therapeutics and Incyte into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amicus Therapeutics and Incyte, you can compare the effects of market volatilities on Amicus Therapeutics and Incyte 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 Amicus Therapeutics with a short position of Incyte. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amicus Therapeutics and Incyte.
Diversification Opportunities for Amicus Therapeutics and Incyte
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Amicus and Incyte is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Amicus Therapeutics and Incyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incyte and Amicus 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 Amicus Therapeutics are associated (or correlated) with Incyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incyte has no effect on the direction of Amicus Therapeutics i.e., Amicus Therapeutics and Incyte go up and down completely randomly.
Pair Corralation between Amicus Therapeutics and Incyte
Given the investment horizon of 90 days Amicus Therapeutics is expected to generate 1.67 times less return on investment than Incyte. But when comparing it to its historical volatility, Amicus Therapeutics is 1.06 times less risky than Incyte. It trades about 0.14 of its potential returns per unit of risk. Incyte is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,953 in Incyte on November 2, 2024 and sell it today you would earn a total of 424.00 from holding Incyte or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amicus Therapeutics vs. Incyte
Performance |
| Timeline |
| Amicus Therapeutics |
| Incyte |
Amicus Therapeutics and Incyte Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amicus Therapeutics and Incyte
The main advantage of trading using opposite Amicus Therapeutics and Incyte positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amicus Therapeutics position performs unexpectedly, Incyte 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 Incyte will offset losses from the drop in Incyte's long position.| Amicus Therapeutics vs. Incyte | Amicus Therapeutics vs. Denali Therapeutics | Amicus Therapeutics vs. argenx NV ADR | Amicus Therapeutics vs. Harmony Biosciences Holdings |
| Incyte vs. Alnylam Pharmaceuticals | Incyte vs. United Therapeutics | Incyte vs. Ultragenyx | Incyte vs. Apellis 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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