Correlation Between Incyte and ACADIA Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Incyte and ACADIA Pharmaceuticals 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 Incyte and ACADIA Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Incyte and ACADIA Pharmaceuticals, you can compare the effects of market volatilities on Incyte and ACADIA Pharmaceuticals 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 Incyte with a short position of ACADIA Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incyte and ACADIA Pharmaceuticals.
Diversification Opportunities for Incyte and ACADIA Pharmaceuticals
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Incyte and ACADIA is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Incyte and ACADIA Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACADIA Pharmaceuticals and Incyte 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 Incyte are associated (or correlated) with ACADIA Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACADIA Pharmaceuticals has no effect on the direction of Incyte i.e., Incyte and ACADIA Pharmaceuticals go up and down completely randomly.
Pair Corralation between Incyte and ACADIA Pharmaceuticals
Given the investment horizon of 90 days Incyte is expected to generate 1.12 times less return on investment than ACADIA Pharmaceuticals. In addition to that, Incyte is 1.25 times more volatile than ACADIA Pharmaceuticals. It trades about 0.13 of its total potential returns per unit of risk. ACADIA Pharmaceuticals is currently generating about 0.18 per unit of volatility. If you would invest 1,474 in ACADIA Pharmaceuticals on August 27, 2024 and sell it today you would earn a total of 163.00 from holding ACADIA Pharmaceuticals or generate 11.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Incyte vs. ACADIA Pharmaceuticals
Performance |
| Timeline |
| Incyte |
| ACADIA Pharmaceuticals |
Incyte and ACADIA Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Incyte and ACADIA Pharmaceuticals
The main advantage of trading using opposite Incyte and ACADIA Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incyte position performs unexpectedly, ACADIA Pharmaceuticals 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 ACADIA Pharmaceuticals will offset losses from the drop in ACADIA Pharmaceuticals' long position.| Incyte vs. Alnylam Pharmaceuticals | Incyte vs. United Therapeutics | Incyte vs. Ultragenyx | Incyte vs. Apellis Pharmaceuticals |
| ACADIA Pharmaceuticals vs. Madrigal Pharmaceuticals | ACADIA Pharmaceuticals vs. Viking Therapeutics | ACADIA Pharmaceuticals vs. Sarepta Therapeutics | ACADIA Pharmaceuticals vs. Hepion 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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