Correlation Between Neurocrine Biosciences and Eagle Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Neurocrine Biosciences and Eagle 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 Neurocrine Biosciences and Eagle Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neurocrine Biosciences and Eagle Pharmaceuticals, you can compare the effects of market volatilities on Neurocrine Biosciences and Eagle 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 Neurocrine Biosciences with a short position of Eagle Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neurocrine Biosciences and Eagle Pharmaceuticals.
Diversification Opportunities for Neurocrine Biosciences and Eagle Pharmaceuticals
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Neurocrine and Eagle is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Neurocrine Biosciences and Eagle Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Pharmaceuticals and Neurocrine Biosciences 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 Neurocrine Biosciences are associated (or correlated) with Eagle Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Pharmaceuticals has no effect on the direction of Neurocrine Biosciences i.e., Neurocrine Biosciences and Eagle Pharmaceuticals go up and down completely randomly.
Pair Corralation between Neurocrine Biosciences and Eagle Pharmaceuticals
Given the investment horizon of 90 days Neurocrine Biosciences is expected to generate 0.37 times more return on investment than Eagle Pharmaceuticals. However, Neurocrine Biosciences is 2.69 times less risky than Eagle Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Eagle Pharmaceuticals is currently generating about -0.09 per unit of risk. If you would invest 13,040 in Neurocrine Biosciences on August 27, 2024 and sell it today you would lose (475.00) from holding Neurocrine Biosciences or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.85% |
| Values | Daily Returns |
Neurocrine Biosciences vs. Eagle Pharmaceuticals
Performance |
| Timeline |
| Neurocrine Biosciences |
| Eagle Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Neurocrine Biosciences and Eagle Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neurocrine Biosciences and Eagle Pharmaceuticals
The main advantage of trading using opposite Neurocrine Biosciences and Eagle Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neurocrine Biosciences position performs unexpectedly, Eagle 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 Eagle Pharmaceuticals will offset losses from the drop in Eagle Pharmaceuticals' long position.| Neurocrine Biosciences vs. Amphastar P | Neurocrine Biosciences vs. Collegium Pharmaceutical | Neurocrine Biosciences vs. Ironwood Pharmaceuticals | Neurocrine Biosciences vs. ANI Pharmaceuticals |
| Eagle Pharmaceuticals vs. ANI Pharmaceuticals | Eagle Pharmaceuticals vs. Phibro Animal Health | Eagle Pharmaceuticals vs. Prestige Brand Holdings | Eagle Pharmaceuticals vs. Collegium Pharmaceutical |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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