Correlation Between Lyra Therapeutics and Scilex Holding
Can any of the company-specific risk be diversified away by investing in both Lyra Therapeutics and Scilex Holding 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 Lyra Therapeutics and Scilex Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyra Therapeutics and Scilex Holding, you can compare the effects of market volatilities on Lyra Therapeutics and Scilex Holding 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 Lyra Therapeutics with a short position of Scilex Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyra Therapeutics and Scilex Holding.
Diversification Opportunities for Lyra Therapeutics and Scilex Holding
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lyra and Scilex is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lyra Therapeutics and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding and Lyra 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 Lyra Therapeutics are associated (or correlated) with Scilex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scilex Holding has no effect on the direction of Lyra Therapeutics i.e., Lyra Therapeutics and Scilex Holding go up and down completely randomly.
Pair Corralation between Lyra Therapeutics and Scilex Holding
Given the investment horizon of 90 days Lyra Therapeutics is expected to generate 1.2 times more return on investment than Scilex Holding. However, Lyra Therapeutics is 1.2 times more volatile than Scilex Holding. It trades about -0.07 of its potential returns per unit of risk. Scilex Holding is currently generating about -0.23 per unit of risk. If you would invest 25.00 in Lyra Therapeutics on August 29, 2024 and sell it today you would lose (5.00) from holding Lyra Therapeutics or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyra Therapeutics vs. Scilex Holding
Performance |
| Timeline |
| Lyra Therapeutics |
| Scilex Holding |
Lyra Therapeutics and Scilex Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyra Therapeutics and Scilex Holding
The main advantage of trading using opposite Lyra Therapeutics and Scilex Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyra Therapeutics position performs unexpectedly, Scilex Holding 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 Scilex Holding will offset losses from the drop in Scilex Holding's long position.| Lyra Therapeutics vs. CytomX Therapeutics | Lyra Therapeutics vs. Assembly Biosciences | Lyra Therapeutics vs. Achilles Therapeutics PLC | Lyra Therapeutics vs. Instil Bio |
| Scilex Holding vs. AstraZeneca PLC ADR | Scilex Holding vs. Gilead Sciences | Scilex Holding vs. Bristol Myers Squibb | Scilex Holding vs. Amgen Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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