Correlation Between Legend Biotech and Xeris Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and Xeris Pharmaceuticals 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 Xeris Pharmaceuticals 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 Xeris Pharmaceuticals, you can compare the effects of market volatilities on Legend Biotech and Xeris Pharmaceuticals 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 Xeris Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Xeris Pharmaceuticals.
Diversification Opportunities for Legend Biotech and Xeris Pharmaceuticals
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legend and Xeris is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Xeris Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xeris Pharmaceuticals 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 Xeris Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xeris Pharmaceuticals has no effect on the direction of Legend Biotech i.e., Legend Biotech and Xeris Pharmaceuticals go up and down completely randomly.
Pair Corralation between Legend Biotech and Xeris Pharmaceuticals
Given the investment horizon of 90 days Legend Biotech is expected to generate 3.01 times less return on investment than Xeris Pharmaceuticals. But when comparing it to its historical volatility, Legend Biotech Corp is 1.03 times less risky than Xeris Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Xeris Pharmaceuticals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 245.00 in Xeris Pharmaceuticals on August 30, 2024 and sell it today you would earn a total of 100.00 from holding Xeris Pharmaceuticals or generate 40.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Biotech Corp vs. Xeris Pharmaceuticals
Performance |
| Timeline |
| Legend Biotech Corp |
| Xeris Pharmaceuticals |
Legend Biotech and Xeris Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and Xeris Pharmaceuticals
The main advantage of trading using opposite Legend Biotech and Xeris Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, Xeris Pharmaceuticals 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 Xeris Pharmaceuticals will offset losses from the drop in Xeris Pharmaceuticals' long position.| Legend Biotech vs. Ikena Oncology | Legend Biotech vs. Eliem Therapeutics | Legend Biotech vs. HCW Biologics | Legend Biotech vs. Tempest Therapeutics |
| Xeris Pharmaceuticals vs. Protalix Biotherapeutics | Xeris Pharmaceuticals vs. Seres Therapeutics | Xeris Pharmaceuticals vs. Cidara Therapeutics | Xeris Pharmaceuticals vs. Immunitybio |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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