Correlation Between Legend Biotech and Alnylam Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and Alnylam 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 Legend Biotech and Alnylam Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legend Biotech Corp and Alnylam Pharmaceuticals, you can compare the effects of market volatilities on Legend Biotech and Alnylam 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 Legend Biotech with a short position of Alnylam Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Alnylam Pharmaceuticals.
Diversification Opportunities for Legend Biotech and Alnylam Pharmaceuticals
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legend and Alnylam is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Alnylam Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alnylam Pharmaceuticals and Legend Biotech 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 Legend Biotech Corp are associated (or correlated) with Alnylam Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alnylam Pharmaceuticals has no effect on the direction of Legend Biotech i.e., Legend Biotech and Alnylam Pharmaceuticals go up and down completely randomly.
Pair Corralation between Legend Biotech and Alnylam Pharmaceuticals
Given the investment horizon of 90 days Legend Biotech is expected to generate 1.47 times less return on investment than Alnylam Pharmaceuticals. But when comparing it to its historical volatility, Legend Biotech Corp is 1.09 times less risky than Alnylam Pharmaceuticals. It trades about 0.17 of its potential returns per unit of risk. Alnylam Pharmaceuticals is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 24,055 in Alnylam Pharmaceuticals on November 9, 2024 and sell it today you would earn a total of 3,770 from holding Alnylam Pharmaceuticals or generate 15.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Biotech Corp vs. Alnylam Pharmaceuticals
Performance |
| Timeline |
| Legend Biotech Corp |
| Alnylam Pharmaceuticals |
Legend Biotech and Alnylam Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and Alnylam Pharmaceuticals
The main advantage of trading using opposite Legend Biotech and Alnylam Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, Alnylam 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 Alnylam Pharmaceuticals will offset losses from the drop in Alnylam Pharmaceuticals' long position.| Legend Biotech vs. Vaxcyte | Legend Biotech vs. Apellis Pharmaceuticals | Legend Biotech vs. Travere Therapeutics | Legend Biotech vs. Akero Therapeutics |
| Alnylam Pharmaceuticals vs. ProQR Therapeutics BV | Alnylam Pharmaceuticals vs. Wave Life Sciences | Alnylam Pharmaceuticals vs. Blueprint Medicines Corp | Alnylam Pharmaceuticals vs. Apellis 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |