Correlation Between Madrigal Pharmaceuticals and BioXcel Therapeutics
Can any of the company-specific risk be diversified away by investing in both Madrigal Pharmaceuticals and BioXcel 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 Madrigal Pharmaceuticals and BioXcel Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madrigal Pharmaceuticals and BioXcel Therapeutics, you can compare the effects of market volatilities on Madrigal Pharmaceuticals and BioXcel 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 Madrigal Pharmaceuticals with a short position of BioXcel Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madrigal Pharmaceuticals and BioXcel Therapeutics.
Diversification Opportunities for Madrigal Pharmaceuticals and BioXcel Therapeutics
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Madrigal and BioXcel is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Madrigal Pharmaceuticals and BioXcel Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioXcel Therapeutics and Madrigal 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 Madrigal Pharmaceuticals are associated (or correlated) with BioXcel Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioXcel Therapeutics has no effect on the direction of Madrigal Pharmaceuticals i.e., Madrigal Pharmaceuticals and BioXcel Therapeutics go up and down completely randomly.
Pair Corralation between Madrigal Pharmaceuticals and BioXcel Therapeutics
Given the investment horizon of 90 days Madrigal Pharmaceuticals is expected to generate 1.08 times more return on investment than BioXcel Therapeutics. However, Madrigal Pharmaceuticals is 1.08 times more volatile than BioXcel Therapeutics. It trades about 0.34 of its potential returns per unit of risk. BioXcel Therapeutics is currently generating about -0.22 per unit of risk. If you would invest 21,700 in Madrigal Pharmaceuticals on August 28, 2024 and sell it today you would earn a total of 12,818 from holding Madrigal Pharmaceuticals or generate 59.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madrigal Pharmaceuticals vs. BioXcel Therapeutics
Performance |
| Timeline |
| Madrigal Pharmaceuticals |
| BioXcel Therapeutics |
Madrigal Pharmaceuticals and BioXcel Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madrigal Pharmaceuticals and BioXcel Therapeutics
The main advantage of trading using opposite Madrigal Pharmaceuticals and BioXcel Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madrigal Pharmaceuticals position performs unexpectedly, BioXcel 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 BioXcel Therapeutics will offset losses from the drop in BioXcel Therapeutics' long position.| Madrigal Pharmaceuticals vs. Eliem Therapeutics | Madrigal Pharmaceuticals vs. HCW Biologics | Madrigal Pharmaceuticals vs. Scpharmaceuticals | Madrigal Pharmaceuticals vs. Milestone Pharmaceuticals |
| BioXcel Therapeutics vs. Terns Pharmaceuticals | BioXcel Therapeutics vs. Amylyx Pharmaceuticals | BioXcel Therapeutics vs. Acumen Pharmaceuticals | BioXcel Therapeutics vs. Inozyme Pharma |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |