Correlation Between Lexicon Pharmaceuticals and Leap Therapeutics
Can any of the company-specific risk be diversified away by investing in both Lexicon Pharmaceuticals and Leap Therapeutics 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 Leap Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lexicon Pharmaceuticals and Leap Therapeutics, you can compare the effects of market volatilities on Lexicon Pharmaceuticals and Leap Therapeutics 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 Leap Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexicon Pharmaceuticals and Leap Therapeutics.
Diversification Opportunities for Lexicon Pharmaceuticals and Leap Therapeutics
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lexicon and Leap is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lexicon Pharmaceuticals and Leap Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leap Therapeutics 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 Leap Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leap Therapeutics has no effect on the direction of Lexicon Pharmaceuticals i.e., Lexicon Pharmaceuticals and Leap Therapeutics go up and down completely randomly.
Pair Corralation between Lexicon Pharmaceuticals and Leap Therapeutics
Given the investment horizon of 90 days Lexicon Pharmaceuticals is expected to under-perform the Leap Therapeutics. In addition to that, Lexicon Pharmaceuticals is 2.0 times more volatile than Leap Therapeutics. It trades about -0.39 of its total potential returns per unit of risk. Leap Therapeutics is currently generating about -0.31 per unit of volatility. If you would invest 417.00 in Leap Therapeutics on August 31, 2024 and sell it today you would lose (122.00) from holding Leap Therapeutics or give up 29.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lexicon Pharmaceuticals vs. Leap Therapeutics
Performance |
| Timeline |
| Lexicon Pharmaceuticals |
| Leap Therapeutics |
Lexicon Pharmaceuticals and Leap Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lexicon Pharmaceuticals and Leap Therapeutics
The main advantage of trading using opposite Lexicon Pharmaceuticals and Leap Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexicon Pharmaceuticals position performs unexpectedly, Leap Therapeutics 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 Leap Therapeutics will offset losses from the drop in Leap Therapeutics' long position.| Lexicon Pharmaceuticals vs. BioLineRx | Lexicon Pharmaceuticals vs. Ardelyx | Lexicon Pharmaceuticals vs. Seres Therapeutics | Lexicon Pharmaceuticals vs. Immunitybio |
| Leap Therapeutics vs. X4 Pharmaceuticals | Leap Therapeutics vs. Terns Pharmaceuticals | Leap Therapeutics vs. Day One Biopharmaceuticals | Leap Therapeutics vs. PDS Biotechnology Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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