Correlation Between Geron and Vaxcyte
Can any of the company-specific risk be diversified away by investing in both Geron and Vaxcyte 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 Geron and Vaxcyte into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geron and Vaxcyte, you can compare the effects of market volatilities on Geron and Vaxcyte 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 Geron with a short position of Vaxcyte. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geron and Vaxcyte.
Diversification Opportunities for Geron and Vaxcyte
Very weak diversification
The 3 months correlation between Geron and Vaxcyte is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Geron and Vaxcyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaxcyte and Geron 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 Geron are associated (or correlated) with Vaxcyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaxcyte has no effect on the direction of Geron i.e., Geron and Vaxcyte go up and down completely randomly.
Pair Corralation between Geron and Vaxcyte
Given the investment horizon of 90 days Geron is expected to under-perform the Vaxcyte. But the stock apears to be less risky and, when comparing its historical volatility, Geron is 1.16 times less risky than Vaxcyte. The stock trades about -0.3 of its potential returns per unit of risk. The Vaxcyte is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 9,145 in Vaxcyte on November 26, 2024 and sell it today you would lose (1,171) from holding Vaxcyte or give up 12.8% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Geron vs. Vaxcyte
Performance |
Timeline |
Geron |
Vaxcyte |
Geron and Vaxcyte Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Geron and Vaxcyte
The main advantage of trading using opposite Geron and Vaxcyte positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geron position performs unexpectedly, Vaxcyte 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 Vaxcyte will offset losses from the drop in Vaxcyte's long position.Geron vs. Viking Therapeutics | ||
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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