Correlation Between Ironwood Pharmaceuticals and Eagle Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Ironwood Pharmaceuticals and Eagle 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 Ironwood Pharmaceuticals and Eagle Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ironwood Pharmaceuticals and Eagle Pharmaceuticals, you can compare the effects of market volatilities on Ironwood Pharmaceuticals and Eagle 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 Ironwood Pharmaceuticals with a short position of Eagle Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ironwood Pharmaceuticals and Eagle Pharmaceuticals.
Diversification Opportunities for Ironwood Pharmaceuticals and Eagle Pharmaceuticals
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ironwood and Eagle is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ironwood Pharmaceuticals and Eagle Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Pharmaceuticals and Ironwood 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 Ironwood Pharmaceuticals are associated (or correlated) with Eagle Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Pharmaceuticals has no effect on the direction of Ironwood Pharmaceuticals i.e., Ironwood Pharmaceuticals and Eagle Pharmaceuticals go up and down completely randomly.
Pair Corralation between Ironwood Pharmaceuticals and Eagle Pharmaceuticals
Given the investment horizon of 90 days Ironwood Pharmaceuticals is expected to generate 0.76 times more return on investment than Eagle Pharmaceuticals. However, Ironwood Pharmaceuticals is 1.31 times less risky than Eagle Pharmaceuticals. It trades about -0.09 of its potential returns per unit of risk. Eagle Pharmaceuticals is currently generating about -0.09 per unit of risk. If you would invest 943.00 in Ironwood Pharmaceuticals on August 27, 2024 and sell it today you would lose (599.00) from holding Ironwood Pharmaceuticals or give up 63.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.85% |
| Values | Daily Returns |
Ironwood Pharmaceuticals vs. Eagle Pharmaceuticals
Performance |
| Timeline |
| Ironwood Pharmaceuticals |
| Eagle Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ironwood Pharmaceuticals and Eagle Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ironwood Pharmaceuticals and Eagle Pharmaceuticals
The main advantage of trading using opposite Ironwood Pharmaceuticals and Eagle Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ironwood Pharmaceuticals position performs unexpectedly, Eagle 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 Eagle Pharmaceuticals will offset losses from the drop in Eagle Pharmaceuticals' long position.| Ironwood Pharmaceuticals vs. Neurocrine Biosciences | Ironwood Pharmaceuticals vs. Amphastar P | Ironwood Pharmaceuticals vs. Collegium Pharmaceutical | Ironwood Pharmaceuticals vs. ANI Pharmaceuticals |
| Eagle Pharmaceuticals vs. ANI Pharmaceuticals | Eagle Pharmaceuticals vs. Phibro Animal Health | Eagle Pharmaceuticals vs. Prestige Brand Holdings | Eagle Pharmaceuticals vs. Collegium Pharmaceutical |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |