Correlation Between Iovance Biotherapeutics and Lexicon Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Iovance Biotherapeutics and Lexicon 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 Iovance Biotherapeutics and Lexicon Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iovance Biotherapeutics and Lexicon Pharmaceuticals, you can compare the effects of market volatilities on Iovance Biotherapeutics and Lexicon 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 Iovance Biotherapeutics with a short position of Lexicon Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iovance Biotherapeutics and Lexicon Pharmaceuticals.
Diversification Opportunities for Iovance Biotherapeutics and Lexicon Pharmaceuticals
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iovance and Lexicon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Iovance Biotherapeutics and Lexicon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexicon Pharmaceuticals and Iovance Biotherapeutics 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 Iovance Biotherapeutics are associated (or correlated) with Lexicon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexicon Pharmaceuticals has no effect on the direction of Iovance Biotherapeutics i.e., Iovance Biotherapeutics and Lexicon Pharmaceuticals go up and down completely randomly.
Pair Corralation between Iovance Biotherapeutics and Lexicon Pharmaceuticals
Given the investment horizon of 90 days Iovance Biotherapeutics is expected to under-perform the Lexicon Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Iovance Biotherapeutics is 2.12 times less risky than Lexicon Pharmaceuticals. The stock trades about -0.34 of its potential returns per unit of risk. The Lexicon Pharmaceuticals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 78.00 in Lexicon Pharmaceuticals on November 2, 2024 and sell it today you would earn a total of 4.00 from holding Lexicon Pharmaceuticals or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iovance Biotherapeutics vs. Lexicon Pharmaceuticals
Performance |
| Timeline |
| Iovance Biotherapeutics |
| Lexicon Pharmaceuticals |
Iovance Biotherapeutics and Lexicon Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iovance Biotherapeutics and Lexicon Pharmaceuticals
The main advantage of trading using opposite Iovance Biotherapeutics and Lexicon Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iovance Biotherapeutics position performs unexpectedly, Lexicon 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 Lexicon Pharmaceuticals will offset losses from the drop in Lexicon Pharmaceuticals' long position.| Iovance Biotherapeutics vs. PTC Therapeutics | Iovance Biotherapeutics vs. Krystal Biotech | Iovance Biotherapeutics vs. Sarepta Therapeutics | Iovance Biotherapeutics vs. Madrigal Pharmaceuticals |
| Lexicon Pharmaceuticals vs. BioLineRx | Lexicon Pharmaceuticals vs. Ardelyx | Lexicon Pharmaceuticals vs. Seres Therapeutics | Lexicon Pharmaceuticals vs. Immunitybio |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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