Correlation Between Larimar Therapeutics and MannKind Corp
Can any of the company-specific risk be diversified away by investing in both Larimar Therapeutics and MannKind Corp 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 Larimar Therapeutics and MannKind Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Larimar Therapeutics and MannKind Corp, you can compare the effects of market volatilities on Larimar Therapeutics and MannKind Corp 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 Larimar Therapeutics with a short position of MannKind Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Larimar Therapeutics and MannKind Corp.
Diversification Opportunities for Larimar Therapeutics and MannKind Corp
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Larimar and MannKind is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Larimar Therapeutics and MannKind Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MannKind Corp and Larimar Therapeutics 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 Larimar Therapeutics are associated (or correlated) with MannKind Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MannKind Corp has no effect on the direction of Larimar Therapeutics i.e., Larimar Therapeutics and MannKind Corp go up and down completely randomly.
Pair Corralation between Larimar Therapeutics and MannKind Corp
Given the investment horizon of 90 days Larimar Therapeutics is expected to generate 2.63 times more return on investment than MannKind Corp. However, Larimar Therapeutics is 2.63 times more volatile than MannKind Corp. It trades about 0.05 of its potential returns per unit of risk. MannKind Corp is currently generating about -0.16 per unit of risk. If you would invest 387.00 in Larimar Therapeutics on November 1, 2024 and sell it today you would earn a total of 10.00 from holding Larimar Therapeutics or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Larimar Therapeutics vs. MannKind Corp
Performance |
| Timeline |
| Larimar Therapeutics |
| MannKind Corp |
Larimar Therapeutics and MannKind Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Larimar Therapeutics and MannKind Corp
The main advantage of trading using opposite Larimar Therapeutics and MannKind Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Larimar Therapeutics position performs unexpectedly, MannKind Corp 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 MannKind Corp will offset losses from the drop in MannKind Corp's long position.| Larimar Therapeutics vs. Vaxcyte | Larimar Therapeutics vs. Syndax Pharmaceuticals | Larimar Therapeutics vs. Merus BV | Larimar Therapeutics vs. Sutro Biopharma |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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