Correlation Between Legend Biotech and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Legend Biotech and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Dow Jones.
Diversification Opportunities for Legend Biotech and Dow Jones
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legend and Dow is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Legend Biotech i.e., Legend Biotech and Dow Jones go up and down completely randomly.
Pair Corralation between Legend Biotech and Dow Jones
Given the investment horizon of 90 days Legend Biotech Corp is expected to under-perform the Dow Jones. In addition to that, Legend Biotech is 3.49 times more volatile than Dow Jones Industrial. It trades about -0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of volatility. If you would invest 4,234,224 in Dow Jones Industrial on October 20, 2024 and sell it today you would earn a total of 114,559 from holding Dow Jones Industrial or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Legend Biotech Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Legend Biotech and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Legend Biotech Corp
Pair trading matchups for Legend Biotech
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Legend Biotech and Dow Jones
The main advantage of trading using opposite Legend Biotech and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Legend Biotech vs. Vaxcyte | Legend Biotech vs. Apellis Pharmaceuticals | Legend Biotech vs. Travere Therapeutics | Legend Biotech vs. Akero Therapeutics |
| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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