Correlation Between Seres Therapeutics and Lexicon Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Seres Therapeutics and Lexicon 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 Seres Therapeutics and Lexicon Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seres Therapeutics and Lexicon Pharmaceuticals, you can compare the effects of market volatilities on Seres Therapeutics and Lexicon 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 Seres Therapeutics with a short position of Lexicon Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seres Therapeutics and Lexicon Pharmaceuticals.
Diversification Opportunities for Seres Therapeutics and Lexicon Pharmaceuticals
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Seres and Lexicon is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Seres Therapeutics and Lexicon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexicon Pharmaceuticals and Seres 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 Seres Therapeutics are associated (or correlated) with Lexicon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexicon Pharmaceuticals has no effect on the direction of Seres Therapeutics i.e., Seres Therapeutics and Lexicon Pharmaceuticals go up and down completely randomly.
Pair Corralation between Seres Therapeutics and Lexicon Pharmaceuticals
Given the investment horizon of 90 days Seres Therapeutics is expected to generate 0.88 times more return on investment than Lexicon Pharmaceuticals. However, Seres Therapeutics is 1.14 times less risky than Lexicon Pharmaceuticals. It trades about 0.17 of its potential returns per unit of risk. Lexicon Pharmaceuticals is currently generating about -0.34 per unit of risk. If you would invest 70.00 in Seres Therapeutics on August 28, 2024 and sell it today you would earn a total of 19.00 from holding Seres Therapeutics or generate 27.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seres Therapeutics vs. Lexicon Pharmaceuticals
Performance |
| Timeline |
| Seres Therapeutics |
| Lexicon Pharmaceuticals |
Seres Therapeutics and Lexicon Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seres Therapeutics and Lexicon Pharmaceuticals
The main advantage of trading using opposite Seres Therapeutics and Lexicon Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seres Therapeutics position performs unexpectedly, Lexicon 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 Lexicon Pharmaceuticals will offset losses from the drop in Lexicon Pharmaceuticals' long position.| Seres Therapeutics vs. Syros Pharmaceuticals | Seres Therapeutics vs. Iovance Biotherapeutics | Seres Therapeutics vs. Veracyte | Seres Therapeutics vs. Fate Therapeutics |
| Lexicon Pharmaceuticals vs. BioLineRx | Lexicon Pharmaceuticals vs. Ardelyx | Lexicon Pharmaceuticals vs. Seres Therapeutics | Lexicon 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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