Correlation Between Intercept Pharmaceuticals and Navidea Biopharmaceutica
Can any of the company-specific risk be diversified away by investing in both Intercept Pharmaceuticals and Navidea Biopharmaceutica 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 Intercept Pharmaceuticals and Navidea Biopharmaceutica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intercept Pharmaceuticals and Navidea Biopharmaceuticals, you can compare the effects of market volatilities on Intercept Pharmaceuticals and Navidea Biopharmaceutica 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 Intercept Pharmaceuticals with a short position of Navidea Biopharmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intercept Pharmaceuticals and Navidea Biopharmaceutica.
Diversification Opportunities for Intercept Pharmaceuticals and Navidea Biopharmaceutica
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Intercept and Navidea is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Intercept Pharmaceuticals and Navidea Biopharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navidea Biopharmaceutica and Intercept Pharmaceuticals 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 Intercept Pharmaceuticals are associated (or correlated) with Navidea Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navidea Biopharmaceutica has no effect on the direction of Intercept Pharmaceuticals i.e., Intercept Pharmaceuticals and Navidea Biopharmaceutica go up and down completely randomly.
Pair Corralation between Intercept Pharmaceuticals and Navidea Biopharmaceutica
Given the investment horizon of 90 days Intercept Pharmaceuticals is expected to generate 0.3 times more return on investment than Navidea Biopharmaceutica. However, Intercept Pharmaceuticals is 3.36 times less risky than Navidea Biopharmaceutica. It trades about -0.75 of its potential returns per unit of risk. Navidea Biopharmaceuticals is currently generating about -0.5 per unit of risk. If you would invest 1,076 in Intercept Pharmaceuticals on September 12, 2024 and sell it today you would lose (45.00) from holding Intercept Pharmaceuticals or give up 4.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intercept Pharmaceuticals vs. Navidea Biopharmaceuticals
Performance |
| Timeline |
| Intercept Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Navidea Biopharmaceutica |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Intercept Pharmaceuticals and Navidea Biopharmaceutica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intercept Pharmaceuticals and Navidea Biopharmaceutica
The main advantage of trading using opposite Intercept Pharmaceuticals and Navidea Biopharmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intercept Pharmaceuticals position performs unexpectedly, Navidea Biopharmaceutica 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 Navidea Biopharmaceutica will offset losses from the drop in Navidea Biopharmaceutica's long position.The idea behind Intercept Pharmaceuticals and Navidea Biopharmaceuticals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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