Correlation Between Legend Biotech and Pulmatrix
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and Pulmatrix 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 Pulmatrix 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 Pulmatrix, you can compare the effects of market volatilities on Legend Biotech and Pulmatrix 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 Pulmatrix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Pulmatrix.
Diversification Opportunities for Legend Biotech and Pulmatrix
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legend and Pulmatrix is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Pulmatrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulmatrix 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 Pulmatrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulmatrix has no effect on the direction of Legend Biotech i.e., Legend Biotech and Pulmatrix go up and down completely randomly.
Pair Corralation between Legend Biotech and Pulmatrix
Given the investment horizon of 90 days Legend Biotech Corp is expected to under-perform the Pulmatrix. But the stock apears to be less risky and, when comparing its historical volatility, Legend Biotech Corp is 7.05 times less risky than Pulmatrix. The stock trades about -0.1 of its potential returns per unit of risk. The Pulmatrix is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 220.00 in Pulmatrix on September 1, 2024 and sell it today you would earn a total of 444.00 from holding Pulmatrix or generate 201.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Biotech Corp vs. Pulmatrix
Performance |
| Timeline |
| Legend Biotech Corp |
| Pulmatrix |
Legend Biotech and Pulmatrix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and Pulmatrix
The main advantage of trading using opposite Legend Biotech and Pulmatrix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, Pulmatrix 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 Pulmatrix will offset losses from the drop in Pulmatrix's long position.| Legend Biotech vs. Vaxcyte | Legend Biotech vs. Apellis Pharmaceuticals | Legend Biotech vs. Travere Therapeutics | Legend Biotech vs. Akero Therapeutics |
| Pulmatrix vs. Capricor Therapeutics | Pulmatrix vs. Akari Therapeutics PLC | Pulmatrix vs. Soleno Therapeutics | Pulmatrix vs. Bio Path Holdings |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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