Correlation Between Legend Biotech and Exelixis
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and Exelixis 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 Exelixis 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 Exelixis, you can compare the effects of market volatilities on Legend Biotech and Exelixis 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 Exelixis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Exelixis.
Diversification Opportunities for Legend Biotech and Exelixis
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Legend and Exelixis is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Exelixis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exelixis 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 Exelixis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exelixis has no effect on the direction of Legend Biotech i.e., Legend Biotech and Exelixis go up and down completely randomly.
Pair Corralation between Legend Biotech and Exelixis
Given the investment horizon of 90 days Legend Biotech Corp is expected to under-perform the Exelixis. In addition to that, Legend Biotech is 1.51 times more volatile than Exelixis. It trades about -0.01 of its total potential returns per unit of risk. Exelixis is currently generating about 0.08 per unit of volatility. If you would invest 1,745 in Exelixis on November 9, 2024 and sell it today you would earn a total of 1,622 from holding Exelixis or generate 92.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Biotech Corp vs. Exelixis
Performance |
| Timeline |
| Legend Biotech Corp |
| Exelixis |
Legend Biotech and Exelixis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and Exelixis
The main advantage of trading using opposite Legend Biotech and Exelixis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, Exelixis 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 Exelixis will offset losses from the drop in Exelixis' long position.| Legend Biotech vs. Vaxcyte | Legend Biotech vs. Apellis Pharmaceuticals | Legend Biotech vs. Travere Therapeutics | Legend Biotech vs. Akero Therapeutics |
| Exelixis vs. TG Therapeutics | Exelixis vs. Viking Therapeutics | Exelixis vs. Madrigal Pharmaceuticals | Exelixis vs. BioXcel Therapeutics |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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