Correlation Between Intercept Pharmaceuticals and Revolution Medicines
Can any of the company-specific risk be diversified away by investing in both Intercept Pharmaceuticals and Revolution Medicines 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 Revolution Medicines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intercept Pharmaceuticals and Revolution Medicines, you can compare the effects of market volatilities on Intercept Pharmaceuticals and Revolution Medicines 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 Revolution Medicines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intercept Pharmaceuticals and Revolution Medicines.
Diversification Opportunities for Intercept Pharmaceuticals and Revolution Medicines
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Intercept and Revolution is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Intercept Pharmaceuticals and Revolution Medicines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Medicines 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 Revolution Medicines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Medicines has no effect on the direction of Intercept Pharmaceuticals i.e., Intercept Pharmaceuticals and Revolution Medicines go up and down completely randomly.
Pair Corralation between Intercept Pharmaceuticals and Revolution Medicines
If you would invest 5,042 in Revolution Medicines on August 30, 2024 and sell it today you would earn a total of 816.00 from holding Revolution Medicines or generate 16.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Intercept Pharmaceuticals vs. Revolution Medicines
Performance |
| Timeline |
| Intercept Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Revolution Medicines |
Intercept Pharmaceuticals and Revolution Medicines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intercept Pharmaceuticals and Revolution Medicines
The main advantage of trading using opposite Intercept Pharmaceuticals and Revolution Medicines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intercept Pharmaceuticals position performs unexpectedly, Revolution Medicines 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 Revolution Medicines will offset losses from the drop in Revolution Medicines' long position.The idea behind Intercept Pharmaceuticals and Revolution Medicines 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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