Correlation Between Legend Biotech and Ventyx Biosciences
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and Ventyx Biosciences 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 Ventyx Biosciences 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 Ventyx Biosciences, you can compare the effects of market volatilities on Legend Biotech and Ventyx Biosciences 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 Ventyx Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Ventyx Biosciences.
Diversification Opportunities for Legend Biotech and Ventyx Biosciences
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legend and Ventyx is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Ventyx Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventyx Biosciences 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 Ventyx Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventyx Biosciences has no effect on the direction of Legend Biotech i.e., Legend Biotech and Ventyx Biosciences go up and down completely randomly.
Pair Corralation between Legend Biotech and Ventyx Biosciences
Given the investment horizon of 90 days Legend Biotech Corp is expected to under-perform the Ventyx Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Legend Biotech Corp is 2.34 times less risky than Ventyx Biosciences. The stock trades about -0.1 of its potential returns per unit of risk. The Ventyx Biosciences is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 216.00 in Ventyx Biosciences on September 1, 2024 and sell it today you would earn a total of 52.00 from holding Ventyx Biosciences or generate 24.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Biotech Corp vs. Ventyx Biosciences
Performance |
| Timeline |
| Legend Biotech Corp |
| Ventyx Biosciences |
Legend Biotech and Ventyx Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and Ventyx Biosciences
The main advantage of trading using opposite Legend Biotech and Ventyx Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, Ventyx Biosciences 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 Ventyx Biosciences will offset losses from the drop in Ventyx Biosciences' long position.| Legend Biotech vs. Vaxcyte | Legend Biotech vs. Apellis Pharmaceuticals | Legend Biotech vs. Travere Therapeutics | Legend Biotech vs. Akero Therapeutics |
| Ventyx Biosciences vs. Crinetics Pharmaceuticals | Ventyx Biosciences vs. Enanta Pharmaceuticals | Ventyx Biosciences vs. Amicus Therapeutics | Ventyx Biosciences vs. Connect Biopharma 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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