Correlation Between Legend Biotech and Scilex Holding
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and Scilex Holding 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 Scilex Holding 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 Scilex Holding, you can compare the effects of market volatilities on Legend Biotech and Scilex Holding 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 Scilex Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Scilex Holding.
Diversification Opportunities for Legend Biotech and Scilex Holding
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legend and Scilex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding 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 Scilex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scilex Holding has no effect on the direction of Legend Biotech i.e., Legend Biotech and Scilex Holding go up and down completely randomly.
Pair Corralation between Legend Biotech and Scilex Holding
Given the investment horizon of 90 days Legend Biotech Corp is expected to generate 0.39 times more return on investment than Scilex Holding. However, Legend Biotech Corp is 2.57 times less risky than Scilex Holding. It trades about -0.09 of its potential returns per unit of risk. Scilex Holding is currently generating about -0.23 per unit of risk. If you would invest 4,530 in Legend Biotech Corp on August 29, 2024 and sell it today you would lose (272.00) from holding Legend Biotech Corp or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Biotech Corp vs. Scilex Holding
Performance |
| Timeline |
| Legend Biotech Corp |
| Scilex Holding |
Legend Biotech and Scilex Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and Scilex Holding
The main advantage of trading using opposite Legend Biotech and Scilex Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, Scilex Holding 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 Scilex Holding will offset losses from the drop in Scilex Holding's long position.| Legend Biotech vs. Vaxcyte | Legend Biotech vs. Apellis Pharmaceuticals | Legend Biotech vs. Travere Therapeutics | Legend Biotech vs. Akero Therapeutics |
| Scilex Holding vs. AstraZeneca PLC ADR | Scilex Holding vs. Gilead Sciences | Scilex Holding vs. Bristol Myers Squibb | Scilex Holding vs. Amgen Inc |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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