Correlation Between Legend Biotech and Lyra Therapeutics
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and Lyra Therapeutics 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 Lyra Therapeutics 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 Lyra Therapeutics, you can compare the effects of market volatilities on Legend Biotech and Lyra Therapeutics 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 Lyra Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Lyra Therapeutics.
Diversification Opportunities for Legend Biotech and Lyra Therapeutics
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legend and Lyra is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Lyra Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyra Therapeutics 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 Lyra Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyra Therapeutics has no effect on the direction of Legend Biotech i.e., Legend Biotech and Lyra Therapeutics go up and down completely randomly.
Pair Corralation between Legend Biotech and Lyra Therapeutics
Given the investment horizon of 90 days Legend Biotech Corp is expected to generate 0.33 times more return on investment than Lyra Therapeutics. However, Legend Biotech Corp is 3.05 times less risky than Lyra Therapeutics. It trades about -0.09 of its potential returns per unit of risk. Lyra Therapeutics is currently generating about -0.1 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Biotech Corp vs. Lyra Therapeutics
Performance |
| Timeline |
| Legend Biotech Corp |
| Lyra Therapeutics |
Legend Biotech and Lyra Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and Lyra Therapeutics
The main advantage of trading using opposite Legend Biotech and Lyra Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, Lyra Therapeutics 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 Lyra Therapeutics will offset losses from the drop in Lyra Therapeutics' long position.| Legend Biotech vs. Eliem Therapeutics | Legend Biotech vs. HCW Biologics | Legend Biotech vs. Scpharmaceuticals | Legend Biotech vs. Milestone Pharmaceuticals |
| Lyra Therapeutics vs. Eliem Therapeutics | Lyra Therapeutics vs. HCW Biologics | Lyra Therapeutics vs. Scpharmaceuticals | Lyra Therapeutics 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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