Correlation Between Madrigal Pharmaceuticals and Galectin Therapeutics
Can any of the company-specific risk be diversified away by investing in both Madrigal Pharmaceuticals and Galectin 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 Galectin 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 Galectin Therapeutics, you can compare the effects of market volatilities on Madrigal Pharmaceuticals and Galectin 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 Galectin Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madrigal Pharmaceuticals and Galectin Therapeutics.
Diversification Opportunities for Madrigal Pharmaceuticals and Galectin Therapeutics
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Madrigal and Galectin is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Madrigal Pharmaceuticals and Galectin Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galectin 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 Galectin Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galectin Therapeutics has no effect on the direction of Madrigal Pharmaceuticals i.e., Madrigal Pharmaceuticals and Galectin Therapeutics go up and down completely randomly.
Pair Corralation between Madrigal Pharmaceuticals and Galectin Therapeutics
Given the investment horizon of 90 days Madrigal Pharmaceuticals is expected to generate 0.6 times more return on investment than Galectin Therapeutics. However, Madrigal Pharmaceuticals is 1.66 times less risky than Galectin Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Galectin Therapeutics is currently generating about -0.02 per unit of risk. If you would invest 25,945 in Madrigal Pharmaceuticals on November 3, 2024 and sell it today you would earn a total of 7,535 from holding Madrigal Pharmaceuticals or generate 29.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madrigal Pharmaceuticals vs. Galectin Therapeutics
Performance |
| Timeline |
| Madrigal Pharmaceuticals |
| Galectin Therapeutics |
Madrigal Pharmaceuticals and Galectin Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madrigal Pharmaceuticals and Galectin Therapeutics
The main advantage of trading using opposite Madrigal Pharmaceuticals and Galectin Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madrigal Pharmaceuticals position performs unexpectedly, Galectin 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 Galectin Therapeutics will offset losses from the drop in Galectin Therapeutics' long position.| Madrigal Pharmaceuticals vs. TG Therapeutics | Madrigal Pharmaceuticals vs. Terns Pharmaceuticals | Madrigal Pharmaceuticals vs. Hepion Pharmaceuticals | Madrigal Pharmaceuticals vs. Viking Therapeutics |
| Galectin Therapeutics vs. Madrigal Pharmaceuticals | Galectin Therapeutics vs. Viking Therapeutics | Galectin Therapeutics vs. Sarepta Therapeutics | Galectin Therapeutics vs. Hepion Pharmaceuticals |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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