Correlation Between Incyte and Larimar Therapeutics
Can any of the company-specific risk be diversified away by investing in both Incyte and Larimar Therapeutics 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 Larimar Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Incyte and Larimar Therapeutics, you can compare the effects of market volatilities on Incyte and Larimar Therapeutics 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 Larimar Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incyte and Larimar Therapeutics.
Diversification Opportunities for Incyte and Larimar Therapeutics
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Incyte and Larimar is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Incyte and Larimar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Larimar Therapeutics 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 Larimar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Larimar Therapeutics has no effect on the direction of Incyte i.e., Incyte and Larimar Therapeutics go up and down completely randomly.
Pair Corralation between Incyte and Larimar Therapeutics
Given the investment horizon of 90 days Incyte is expected to generate 2.95 times less return on investment than Larimar Therapeutics. But when comparing it to its historical volatility, Incyte is 2.98 times less risky than Larimar Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Larimar Therapeutics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 340.00 in Larimar Therapeutics on August 24, 2024 and sell it today you would earn a total of 273.00 from holding Larimar Therapeutics or generate 80.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Incyte vs. Larimar Therapeutics
Performance |
| Timeline |
| Incyte |
| Larimar Therapeutics |
Incyte and Larimar Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Incyte and Larimar Therapeutics
The main advantage of trading using opposite Incyte and Larimar Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incyte position performs unexpectedly, Larimar Therapeutics 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 Larimar Therapeutics will offset losses from the drop in Larimar Therapeutics' long position.| Incyte vs. Alnylam Pharmaceuticals | Incyte vs. United Therapeutics | Incyte vs. Ultragenyx | Incyte vs. Apellis Pharmaceuticals |
| Larimar Therapeutics vs. Vaxcyte | Larimar Therapeutics vs. Syndax Pharmaceuticals | Larimar Therapeutics vs. Merus BV | Larimar Therapeutics vs. Sutro Biopharma |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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