Correlation Between MannKind Corp and Biomarin Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both MannKind Corp and Biomarin Pharmaceutical 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 MannKind Corp and Biomarin Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MannKind Corp and Biomarin Pharmaceutical, you can compare the effects of market volatilities on MannKind Corp and Biomarin Pharmaceutical 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 MannKind Corp with a short position of Biomarin Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MannKind Corp and Biomarin Pharmaceutical.
Diversification Opportunities for MannKind Corp and Biomarin Pharmaceutical
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MannKind and Biomarin is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MannKind Corp and Biomarin Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomarin Pharmaceutical and MannKind Corp 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 MannKind Corp are associated (or correlated) with Biomarin Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomarin Pharmaceutical has no effect on the direction of MannKind Corp i.e., MannKind Corp and Biomarin Pharmaceutical go up and down completely randomly.
Pair Corralation between MannKind Corp and Biomarin Pharmaceutical
Given the investment horizon of 90 days MannKind Corp is expected to under-perform the Biomarin Pharmaceutical. But the stock apears to be less risky and, when comparing its historical volatility, MannKind Corp is 1.01 times less risky than Biomarin Pharmaceutical. The stock trades about -0.29 of its potential returns per unit of risk. The Biomarin Pharmaceutical is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 6,790 in Biomarin Pharmaceutical on November 8, 2024 and sell it today you would lose (356.00) from holding Biomarin Pharmaceutical or give up 5.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MannKind Corp vs. Biomarin Pharmaceutical
Performance |
| Timeline |
| MannKind Corp |
| Biomarin Pharmaceutical |
MannKind Corp and Biomarin Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MannKind Corp and Biomarin Pharmaceutical
The main advantage of trading using opposite MannKind Corp and Biomarin Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MannKind Corp position performs unexpectedly, Biomarin Pharmaceutical 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 Biomarin Pharmaceutical will offset losses from the drop in Biomarin Pharmaceutical's long position.| MannKind Corp vs. Biomarin Pharmaceutical | MannKind Corp vs. Vaxcyte | MannKind Corp vs. Liquidia Technologies | MannKind Corp vs. Legend Biotech Corp |
| Biomarin Pharmaceutical vs. Alnylam Pharmaceuticals | Biomarin Pharmaceutical vs. Exelixis | Biomarin Pharmaceutical vs. Halozyme Therapeutics | Biomarin Pharmaceutical vs. Arrowhead 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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