Correlation Between Legend Biotech and Day One
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and Day One 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 Day One 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 Day One Biopharmaceuticals, you can compare the effects of market volatilities on Legend Biotech and Day One 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 Day One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Day One.
Diversification Opportunities for Legend Biotech and Day One
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legend and Day is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Day One Biopharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Day One Biopharmaceu 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 Day One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Day One Biopharmaceu has no effect on the direction of Legend Biotech i.e., Legend Biotech and Day One go up and down completely randomly.
Pair Corralation between Legend Biotech and Day One
Given the investment horizon of 90 days Legend Biotech Corp is expected to generate 0.97 times more return on investment than Day One. However, Legend Biotech Corp is 1.03 times less risky than Day One. It trades about -0.09 of its potential returns per unit of risk. Day One Biopharmaceuticals is currently generating about -0.11 per unit of risk. If you would invest 4,530 in Legend Biotech Corp on August 28, 2024 and sell it today you would lose (261.00) from holding Legend Biotech Corp or give up 5.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Biotech Corp vs. Day One Biopharmaceuticals
Performance |
| Timeline |
| Legend Biotech Corp |
| Day One Biopharmaceu |
Legend Biotech and Day One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and Day One
The main advantage of trading using opposite Legend Biotech and Day One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, Day One 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 Day One will offset losses from the drop in Day One's long position.| Legend Biotech vs. Eliem Therapeutics | Legend Biotech vs. HCW Biologics | Legend Biotech vs. Scpharmaceuticals | Legend Biotech vs. Milestone Pharmaceuticals |
| Day One vs. Eliem Therapeutics | Day One vs. HCW Biologics | Day One vs. Scpharmaceuticals | Day One vs. Milestone 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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