Correlation Between Lexicon Pharmaceuticals and Ardelyx
Can any of the company-specific risk be diversified away by investing in both Lexicon Pharmaceuticals and Ardelyx 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 Lexicon Pharmaceuticals and Ardelyx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lexicon Pharmaceuticals and Ardelyx, you can compare the effects of market volatilities on Lexicon Pharmaceuticals and Ardelyx 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 Lexicon Pharmaceuticals with a short position of Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexicon Pharmaceuticals and Ardelyx.
Diversification Opportunities for Lexicon Pharmaceuticals and Ardelyx
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lexicon and Ardelyx is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lexicon Pharmaceuticals and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx and Lexicon Pharmaceuticals 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 Lexicon Pharmaceuticals are associated (or correlated) with Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Lexicon Pharmaceuticals i.e., Lexicon Pharmaceuticals and Ardelyx go up and down completely randomly.
Pair Corralation between Lexicon Pharmaceuticals and Ardelyx
Given the investment horizon of 90 days Lexicon Pharmaceuticals is expected to under-perform the Ardelyx. In addition to that, Lexicon Pharmaceuticals is 1.4 times more volatile than Ardelyx. It trades about -0.15 of its total potential returns per unit of risk. Ardelyx is currently generating about -0.03 per unit of volatility. If you would invest 615.00 in Ardelyx on August 28, 2024 and sell it today you would lose (90.00) from holding Ardelyx or give up 14.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lexicon Pharmaceuticals vs. Ardelyx
Performance |
| Timeline |
| Lexicon Pharmaceuticals |
| Ardelyx |
Lexicon Pharmaceuticals and Ardelyx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lexicon Pharmaceuticals and Ardelyx
The main advantage of trading using opposite Lexicon Pharmaceuticals and Ardelyx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexicon Pharmaceuticals position performs unexpectedly, Ardelyx 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 Ardelyx will offset losses from the drop in Ardelyx's long position.| Lexicon Pharmaceuticals vs. BioLineRx | Lexicon Pharmaceuticals vs. Ardelyx | Lexicon Pharmaceuticals vs. Seres Therapeutics | Lexicon Pharmaceuticals vs. Immunitybio |
| Ardelyx vs. BioLineRx | Ardelyx vs. Lexicon Pharmaceuticals | Ardelyx vs. Seres Therapeutics | Ardelyx 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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